This lesson discussed pensions and annuities. Pensions or annuities may have a tax-free portion if the taxpayer made after-tax contributions to the plan.

To determine the taxable portion of the annuity payments of a taxpayer, use:

• The Simplified Method if the taxpayer's annuity starting date is after November 18, 1996 and annuity payments are from a qualified plan. For annuity starting dates after 1997, use the annuitant's age (or combined ages if more than one annuitant) at the annuity starting date of the taxpayer(s).
  
  
• The General Rule for annuity payments from a nonqualified plan and for certain retirees age 75 or older.