Ms. Sturm owns a tax-deferred retirement account with a $200,000 current balance. She intends to roll over
Question:
Ms. Sturm owns a tax-deferred retirement account with a $200,000 current balance. She intends to roll over this balance into a new Roth IRA before the end of the year. Ms. Sturm's current marginal tax rate is 35 percent. Compute Ms. Sturm's tax cost of converting her existing retirement account to a Roth IRA and the after-tax rollover if:
a. The existing account is a Section 401(k) plan funded by Ms. Sturm's elective contributions and her employer's matching contributions.
b. The existing account is a traditional IRA to which Ms. Sturm made $38,400 of nondeductible contributions.
Assume the taxable year is 2018.
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Related Book For
Principles Of Taxation For Business And Investment Planning 2019 Edition
ISBN: 9781260161472
22nd Edition
Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan
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