Juan and Angel, ages 56 and 54, respectively, decide to establish Roth IRAs. Juan and Angel are

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Juan and Angel, ages 56 and 54, respectively, decide to establish Roth IRAs. Juan and Angel are married, and both are covered by pension plans where they work. Their adjusted gross income is $125,000. They want to make the maximum contribution to the Roth IRAs.
a. What is the maximum amount they may contribute to a Roth IRA?
b. Assume that Juan and Angel’s adjusted gross income for the year is $175,000. What is the maximum contribution they may make?
c. Assume that Juan and Angel are now ages 62 and 60, respectively, and want to withdraw $10,000 to purchase a new car. What are the tax implications of the withdrawal from the Roth IRA?
d. Assume the same facts as in part c, except that Juan is 60 and Angel is 58.
e. Assume the same facts as in part a, except that Juan and Angel have a regular IRA they want to roll over to a Roth IRA. The balance in the IRA is $20,000. Write a memo describing the tax factors that Juan and Angel should consider before deciding to roll over the IRA to a Roth IRA.

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Concepts In Federal Taxation

ISBN: 9780324379556

19th Edition

Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher

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