what does it mean by annuity start date and tax free amount previously recovered

[Lawrencecv]

annuity information

[JamesG1]

The annuity start date is the date that you began to receive the pension benefits.

Each month pension benefits may include an amount previously invested by the taxpayer.  Consider this a return of capital to the taxpayer.

The amount received by the taxpayer that was not previously invested is taxable income to the taxpayer.  So, such a retirement distribution has a taxable and a nontaxable component.

The IRS uses the Simplified Rule method and the General Rule method to determine how much of the retirement distribution is taxable and how much is a return of capital.

The Simplified Rule method is the more popularly used method.

The tax free amount previously recovered is the total of the amount previously invested and recovered by the taxpayer.