In 2018, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his
Question:
In 2018, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The current balance of his IRA account is $160,000. Over the years, Rashaun has contributed $40,000 to the IRA. Of his $40,000 contributions, $30,000 was
nondeductible and $10,000 was deductible.
a. If Rashaun currently withdraws $20,000 from the IRA, how much tax will he be required to pay on the withdrawal if his marginal tax rate is 22 percent?
b. If Rashaun currently withdraws $70,000 from the IRA, how much tax will he be required to pay on the withdrawal if his marginal tax rate is 32 percent?
c. Using the information provided in part (b), complete Form 8606, Part I, to report the taxable portion of the $70,000 distribution (withdrawal). Use the most recent form available.
DistributionThe word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
a Because Rashaun has made both deductible and nondeductible contributions to his IRA he needs to allocate the distribution between taxable amounts and amounts that are a return of his nondeductible c...View the full answer
Essentials Of Federal Taxation 2019
ISBN: 9781260190045
10th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
