Question

A customer has invested a total of $10,000 in a nonqualified deferred annuity through a payroll deduction plan offered by the school system where she works. The annuity contract is currently valued at $16,000, and she plans to retire. On what amount will the customer be taxed if she chooses a lump-sum withdrawal?

Answer 1

On $6000 amount customer be taxed

Step-by-step explanation:

given data

total invest = $10000

current value = $16000

to find out

On what amount customer be taxed

solution

we know customer is invest here total $10000 and

current value is now $16000

so we can say that here payment non qualified deferred, annuity after tax

so tax are paid of earning

so earning = current value - invest

earning = 16000 - 10000

earning = $6000

so on $6000 amount customer be taxed