Actuarial Tables for Taxing Annuities
Gender based Tables I, II, and III, and Unisex Table V for the taxing of annuities, appear on the following pages. (The IRS has provided a simplified method of taxing annuity payments from qualified plans and tax sheltered annuities, see Q 613.
Treasury regulations extend some of the Tables to higher and lower ages, but the partial Tables are adequate for all practical purposes. The multiples in Tables I, II, and V need not be adjusted for monthly payments. For quarterly, semi-annual or annual payments, they must be adjusted according to the Frequency of Payment Adjustment Table, below.
ALL TABLES ARE ENTERED WITH AGE OF ANNUITANT AT BIRTHDAY NEAREST ANNUITY STARTING DATE.
Frequency of Payment Adjustment Table | ||||||||||||
If the number of whole months from the annuity starting date to the first payment date is | 0-1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
And payments under the contract are to be made: | ||||||||||||
Annually | + .5 | + .4 | + .3 | + .2 | + .1 | 0 | 0 | - .1 | - .2 | - .3 | - .4 | - .5 |
Semiannually | + .2 | + .1 | 0 | 0 | - .1 | - .2 | .... | .... | .... | .... | .... | .... |
Quarterly | + .1 | 0 | - .1 | .... | .... | .... | .... | .... | .... | .... | .... | .... |
Example. Ed Black bought an annuity contract on January 1 which provides him with an annual payment of $4,000 payable on December 31st of each year. His age on birthday nearest the annuity starting date (January 1) is sixty-six. The multiple from Table V for male age 66, is 19.2. This multiple must be adjusted for annual payment by subtracting .5 (19.2 - .5 = 18.7). Thus, his total expected return is $74,800 (18.7 x $4,000). See Treas. Reg. § 1.72-5(a)(2). | ||||||||||||