Exam 15: Choice of Business Entity-Other Considerations

Ester is employed by Montgomery Enterprises and will retire at the end of the current year after 22 years of service. Under the company's defined benefit plan, she can retire at 80% of the average of her three highest consecutive years' salary. Her average salary over these three years is $80,000. What is the maximum amount Ester can receive from Montgomery's pension plan?

A taxpayer must begin withdrawals from any type of retirement plan (except a Roth IRA) no later than April 1 of the tax year after the taxpayer reaches age 70¹/₂ or, if later, the year they retire.

An exemption amount is allowed for the AMT calculation I.as a deduction from tentative AMTI.II.to provide the average individual taxpayer with the opportunity to not be effected by the AMT provisions. III.through legislative grace for taxpayers with moderate amounts of taxable income and without significant preferences and/or adjustments. IV.In the amount of $109,400 for married taxpayers filing jointly. ​