Question

Leo is 34 years old. He contributed $3,000 to a Roth IRA in 2014 and $2,000...

Leo is 34 years old. He contributed $3,000 to a Roth IRA in 2014 and $2,000 in 2015. In 2017, he withdrew the entire balance, which had grwon to $5,466. How much of Leo's withdrawal is taxable and subject to penalty?

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Answer #1

given data

leo is 34 years old

leo contributed in 2014 = $ 3000 (first)

leo contributed in 2015 = $ 2000 (second)

total contribution = first time + second time

= $ 3000 + $ 2000

= $ 5000

total contribution = $ 5000

leo withdrew the entire balance that is $ 5466

the grew up to = $ 5466

interest amount = the amount grew up - total contribution amount

= $ 5466 - $ 5000

interest amount = $ 466

the excess $ 466 (5466 - 5000) is to be treated as interest amount on contribution of

$ 5000

leo withdrew the entire amount, the interest or gain amount will be taxable and it is

subject to panality.

therefore, the amount $ 466 is taxable and $ 466 is subjuct to panality.

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