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Tyler, a 45-year-old single taxpayer, contributed $35,000 to a commercial annuity in 2016. The annuity is a nonqualified plan. In 2020, before the annuity start
Tyler, a 45-year-old single taxpayer, contributed $35,000 to a commercial annuity in 2016. The annuity is a nonqualified plan. In 2020, before the annuity start date, Tyler took a nonperiodic distribution of $8000 and used the money to pay off his credit card debt. If the value of the annuity at the time of the distribution was $40,000, how much of the distribution is taxable?
$0
$3,000
$5,000
$8,000
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