Quiz Question: Proposed Tax Exclusion

Written by Hersh Stern Updated Friday, December 6, 2024

The question was: How large a tax exclusion would the proposed Retirement Security Needs Lifetime Pay Act (H.R. 2748) provide on the income from a non-qualified lifetime annuity?

1. 25% tax exclusion, up to $15,000 per year
2. 45% tax exclusion, up to $20,000 per year
3. 50% tax exclusion, up to $10,000 per year
4. 35% tax exclusion, up to $5,000 per year
5. 10% tax exclusion, up to $12,500 per year

The answer is: 3. If enacted, H.R. 2748 would provide for a 50% tax exclusion on income from NQ lifetime annuities, up to $10,000 per year. The House Bill also would provide a 25% tax exemption on income from annuities sold with the guarantee provisions if the annuities were held in individual retirement accounts or in qualified retirement plans other than defined benefit plans. The bill would exclude the value of longevity insurance from amounts subject to required minimum distributions while changing the rules governing taxation of payments from partially annuitized deferred annuity contracts.