Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has...

Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has contributed a total of $12,000 to the Roth IRA ($4,000 a year). The current value of the Roth IRA is $16,300. In the current year, Sherry withdraws $14,000 of the account balance to purchase a car. Assuming Sherry’s marginal tax rate is 24 percent, how much of the $14,000 withdrawal will she retain after taxes to fund her car purchase?

amount of withdrawal
non-taxable amount
amount subject to tax
tax rate %
penalty rate %
tax
penalty
after tax withdrawal retained

Expert Solution

Answer
Particulars	Amount
Amount of withdrawal	$ 14,000
Non-Taxable Amount	$ 12,000
Amount subject to tax	$ 2,000
Tax Rate	24%
Penalty Rate	10%
Tax ($2,000*24%)	$ 480
Penalty ($2,000*10%)	$ 200
After tax withdrawal retained ($14,000-$480-$200)	$ 13,320

Explanation:

Non qualified distributions are non taxable to the extent they are attributable to contributions. Any earnings made on such contributions are taxed as ordinary income and subject to a 10% penalty

Please Like

ekkarill92 answered 2 years ago

Philip, who is currently age 52, made his only contribution to his Roth IRA in 2017...

Philip, who is currently age 52, made his only contribution to his Roth IRA in 2017 in the amount of $5,500. If he were to receive a total distribution of $11,000 from his Roth IRA today (3/25/2019) to purchase a new car, how much of distribution is subject to income tax and how much of distribution is subject to 10% penalty?

kimberly opened a roth ira november 13,2016 she has made regular deposits and would like to...

kimberly opened a roth ira november 13,2016 she has made regular deposits and would like to know the earliest date she can withdraw some money in a qualified distrubition.her date of birth is september 17,1961

John established his first Roth IRA six years ago and has made a total participant contribution...

John established his first Roth IRA six years ago and has made a total participant contribution of $8,000 so far. Two years ago, he also converted his Traditional IRA assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years old. (a). If John withdraws all the money (including contributions, conversions and earnings) from his account to pay for...

Lisa Simpson, now age 20, wants to retire with $1,500,000 in her Roth IRA. She plans...

Lisa Simpson, now age 20, wants to retire with $1,500,000 in her Roth IRA. She plans to achieve this goal by depositing $3,000 at the beginning of each year at an expected annual rate of 8%. How many deposits must Lisa make in order to reach her goal? Round to the nearest deposit.

Roth IRA Worksheet Lainey Wilkinson is a 36 years old individual who works at a local...

Roth IRA Worksheet Lainey Wilkinson is a 36 years old individual who works at a local library. She starts to invest $3,000 per year this year in a “Roth IRA”. For investments in a Roth IRA, you will never pay taxes on the interest/dividends/profits. Assume that her investments will make 8% annually until her retirement. I. How much will be there in Lainey’s IRA account when she retires at 66. II. Assuming that Roth IRA makes 7% annual return after...

Meredith, who is single, would like to contribute $6,000 to her Roth IRA. What is the...

Meredith, who is single, would like to contribute $6,000 to her Roth IRA. What is the maximum amount that Meredith can contribute if her AGI is $123,000? Note: please provide your answer and explanations on Word or Excel as handwritten responses are difficult to read. Thank you.

Jimmer has contributed $15,000 to his Roth IRA and the balance in the account is $18,000....

Jimmer has contributed $15,000 to his Roth IRA and the balance in the account is $18,000. In the current year, Jimmer withdrew $17,000 from the Roth IRA to pay for a new car. If Jimmer’s marginal ordinary income tax rate is 24 percent, what amount of tax and penalty, if any, is Jimmer required to pay on the withdrawal in each of the following alternative situations? Jimmer opened the Roth account 44 months before he withdrew the $17,000 and Jimmer...

1. A friend has an IRA with an APR of 6.25%. She stared the IRA at...

1. A friend has an IRA with an APR of 6.25%. She stared the IRA at age 25 and deposits $50 per month. a) How much will her IRA contain when she retires at age 65? b) How much money did she contribute to the account? c) Use the answers from parts a) and b) to determine the amount of interest earned. 2. What if your friend from question #1 doubled her deposit and saved $100 per...

Bridgette wants to retire 28 years from now. She decides to start saving $400 each month into a Roth IRA starting at the end of this month.

Bridgette wants to retire 28 years from now. She decides to start saving $400 each month into a Roth IRA starting at the end of this month. If the IRA is expected to earn an average annual return of 10% compounded monthly, how much will she have in the account at the end of 28 years? Round to two decimal places. Years 0 4 8 12 16 20 22 24 28 Cash Flow $400 $400 $400 $400 $400 $400...

52 years old female who has difficulty sleeping and missing her work, she sleeps during day...

52 years old female who has difficulty sleeping and missing her work, she sleeps during day time and not night time. I think she has insomnia and possible menopause because of her age. Treatment plan, including: pharmacotherapy with complementary and OTC therapy, diagnostics (labs and testing), health education and lifestyle changes, age-appropriate preventive care, and follow-up to this visit of patient with insomnia, menopause.

Question