Question

# In 2019, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from...

In 2019, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The balance of his IRA account is \$160,000 (before reducing it for withdrawals/distributions described below). 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. Assume Rashaun did not make any contributions to the account during 2019. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

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 24 percent?

 Amount of withdrawal ____________ Ratio of nondeductible contributions deductible or nondeductible contributions or Total IRA contributions or account balance ____________ deductible or nondeductible contributions or Total IRA contributions or account balance _____________ % Non-taxable Taxable _________ Tax rate _________ % Tax _________

Rate of non taxable contributions = \$30000/\$160000 = 18.75%

Non- taxable contribution of the amount withdrawn = Amount of withdrawl * Rate of non taxable contribution

=\$20000* 18.75% = \$3750

Taxable Contribution =\$20000-\$3750 = \$16250

Tax payable on withdrawl if marginal tax rate is 24%

 Particulars Value Amount of withdrawl \$20000 Ratio of non deductible contributions Non deductible Contribution \$30000 Non taxable Contribution \$3750 Taxable Contribution \$16250 Tax rate 24% Tax \$3900