Question

In: Finance

Explain what makes IRA Contributions deductible or not. Can a contribution still be made to an...

  1. Explain what makes IRA Contributions deductible or not. Can a contribution still be made to an IRA if it is not deductible?Discuss in 2-5sentences.




  1. Explain the similarities and difference between Qualified Roth IRA distribution and a Non-Qualified Roth IRA distribution. Discuss in 2-5 sentences.

Solutions

Expert Solution

(1): Traditional IRAs are tax deductible while IRAs that are not traditional are nondeductible IRAs. With regards to nondeductible IRAs one can make contributions with after-tax dollars. Yes, a contribution can still be made to an IRA if it is not deductible. In fact contributions can be allocated across different kinds of IRAs and you will be allowed to make additions to a tax-deductible, nondeductible, or Roth IRA in a given tax year, as long the combined contributions do not exceed the limit.

(2): Similarities between Qualified Roth IRA distribution and a Non-Qualified Roth IRA distribution is that both have to be reported on your income tax return. Both have to be reported on Form 1040 or form 1040A. In terms of differences Qualified Roth IRA distribution is tax free and penalty free. On the other hand in case of Non-Qualified Roth IRA distribution you will have to pay taxes at your ordinary income tax rate on earnings plus an additional 10% penalty if none of the exceptions related to penalty is applicable.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Lance is single and has a traditional IRA into which he has made deductible contributions for...
Lance is single and has a traditional IRA into which he has made deductible contributions for several years. This year he changed employers and is now an active participant in his employer’s pension plan. His AGI is $95,000. He wants to make a nondeductible contribution to his IRA in the current year. What advice would you give Lance?
Sheena makes a deductible traditional IRA contribution of $2000. Her tax rate in the year of...
Sheena makes a deductible traditional IRA contribution of $2000. Her tax rate in the year of the contribution is 28%. What is the reduction in Sheena’s tax liability (I.e., tax savings) as a result of the contribution? A. $0 B. $560 C. $1,440 D. $2,000
Jenn, age 35, has made deductible contributions to her traditional IRA over the past few years....
Jenn, age 35, has made deductible contributions to her traditional IRA over the past few years. When Jenn's, account balance was $30,000, Jenn received a distribution of the entire $30,000 balance of a traditional IRA. Jenn retained $5,000 of the distribution to help pay the taxes due from the distribution and Jenn immediately contributed the remaining $25,000 to a Roth IRA. What amount of tax and early distribution penalty is Jenn required to pay on the $30,000 distribution from the...
Can an individual make a contribution to an IRA based on unemployment compensation proceeds received? What...
Can an individual make a contribution to an IRA based on unemployment compensation proceeds received? What specifically would you convey to your client based on your tax research results?
Can an individual make a contribution to an IRA based on unemployment compensation proceeds received? What...
Can an individual make a contribution to an IRA based on unemployment compensation proceeds received? What specifically would you convey to your client based on your tax research results? IN YOUR OWN WORDS! any copied and pasted answers from a website WILL BE REPORTED. I can google it myself, without paying a subscription fee for this.
What is a contribution? How are contributions classified? (NONPROFIT FINANCE)
What is a contribution? How are contributions classified? (NONPROFIT FINANCE)
What is the difference between the tax treatment of contributions and deductions from a traditional IRA...
What is the difference between the tax treatment of contributions and deductions from a traditional IRA and a Roth IRA?
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?
(1)Janice made a $6,000 contribution to her traditional IRA account. Her employer, Worldwide publishing, offers a...
(1)Janice made a $6,000 contribution to her traditional IRA account. Her employer, Worldwide publishing, offers a 401k that Janice contributes to. (2)Sale of LMN publically traded stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on 1/15/2015) (3)Sale of QRS publically traded stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on 12/15/2018) (4)Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally purchased for $20,000 on 6/15/2014) (5)Janice inherited publically traded stock worth $30,000 from a...
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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT