Cara, who is 42 years old, had some unexpected medical expenses during the year. To pay for these expenses (which were above the 7.5% of AGI threshold and claimed as itemized deductions on her tax return), she received a $10,000 distribution from her traditional IRA (she has only made deductible contributions to the IRA). Assume CARES Act applies. Assuming her marginal ordinary income tax rate is 22%, what amount of taxes and/or early distribution penalties will Cara be required to pay on this distribution (assume the distribution is not a corona-virus related distribution)?

Multiple Choice

• $2,200 income tax; $1,000 early distribution penalty

• $2,200 income tax; $100 early distribution penalty

• $2,200 income tax; $0 early distribution penalty

• $0 income tax; $0 early distribution penalty

(How does the CARES act effect IRA distributions?)

Answer rating: 100% (QA)

Income tax 10000 22 220... View the full answer