If you have an investment in the plan and your annuity starting date was in 2012, you must use the simplified method explained below to figure the tax-free portion of your annuity payments from a qualified employer plan, qualified employee annuity, or 403(b) tax-sheltered annuity. The only exception is if you are age 75 or older on your annuity starting date and are entitled to guaranteed annuity payments for at least five years; in that case you must use the six-step method (7.23) for commercial annuities rather than the simplified method.
A beneficiary receiving a survivor annuity may use the simplified method.
If your annuity started before 2012 and you have been using the simplified method to report your annuity payments, continue to do so, using the applicable number of expected monthly payments from either Table I or Table II, as discussed below.
Under the simplified method, a level tax-free portion is ...