Question

Max retired in 2017 at age 62. During the year he received distributions of $9,000 from...

Max retired in 2017 at age 62. During the year he received distributions of $9,000 from his IRA. He made nondeductible contributions of $20,000 to the IRA in prior years and has never received a nontaxable distribution. As of December 31, 2017, the value of his IRA was $150,000. Calculate the taxable portion of Max's distribution. Show Work

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When there are non-deductible contributions in the traditional IRA, distributions from the account are not taxable as a percentage. Percentage applicable is non-deductible contributions made divided by IRA balance before distribution.

Non taxable Percentage applicable = 20,000/ 150,000 * 100 = 13.3333%

Taxable percentage = 1- 13.3333% = 86.66667%

Taxable distribution = 9,000 * 86.66667% = 7,800

Non taxable distribution = 9,000 * 13.3333% = 1,200

After the distribution balance non-taxable contributions in the IRA reduces to = 20,000 - 1,200 = 18,800

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Terrance is age 71 and retired. Beginning in 2017, he must start taking minimum distributions from...
Terrance is age 71 and retired. Beginning in 2017, he must start taking minimum distributions from his IRA account that had a balance of $150,000 as of December 31,2016. Make these theee assumptions: His IRA will earn 8% per year, he will withdraw the minimum distribution in the last day of each calendar year, and only one distribution will be take. In 2017. Calculate the amount of his distribution for years 2017 through 2021 and the ending balance in his...
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...
Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional...
Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The current balance of his IRA account is $165,851. Over the years, Rashaun has contributed to the IRA. Of his contributions, $40,100 was nondeductible and $11,300 was deductible. If Rashaun currently withdraws $29,800 from the IRA, how much of the distribution is nontaxable? Please explain how you got each number in your solution and/or where the number comes from.
. In 2018, Max is 85 years of age and single. He received Social Security payments...
. In 2018, Max is 85 years of age and single. He received Social Security payments totaling $14,000 (this includes Medicare premium of $600), dividend and interest income of $21,000, a pension of $30,000 and a taxable IRA benefits of $16,000. What is Max's adjusted gross income for 2018? What is his taxable income? What is his tax owed?
Rick, a retired single taxpayer, began receiving a monthly pension from his former employer in January...
Rick, a retired single taxpayer, began receiving a monthly pension from his former employer in January 2016. He was age 66 when he received the first payment, and the pension will pay over the course of his life. He received a Form 1099-R for the tax year showing a gross distribution of $8,000 in box 1, code 7 in box 7, and total employee contributions of $20,000 in box 9b. Box 2a is blank, and box 2b indicates that the...
Solve the following scenario below: + Quentin attained age 70 1/2 on August 7, this year....
Solve the following scenario below: + Quentin attained age 70 1/2 on August 7, this year. + The balance in Quentin's mutual fund IRA on December 31, last year,is $45,000. + The balance in Quentin's bank IRA on December 31, last year,is $20,000. + Quentin wants to take a distribution from his IRA to satisfy the minimum distribution requirement. + Elizabeth, his wife, is age 65 and is the beneficiary on both of Quentin's IRAs. Which of the following are...
Jon, age 45, had adjusted gross income of $26000 in 2017.During the year ,he incurred and...
Jon, age 45, had adjusted gross income of $26000 in 2017.During the year ,he incurred and paid the following medical expenses. Grab and medicines premium $300 Health insurance premiums $750 Doctors' fees 2250 eyeglasses 75. job received $900 in 2017 as a reimbursement for a portion of the doctors' fees.if Jon were to itemize his deductions, what would be his allowable medical deduction after the adjusted gross income limitation is taken into account ? 1. $ 0 2. $425 3.$600...
Question 1 (1 point) Ray died this year at age 73, and his wife, Mary, age...
Question 1 (1 point) Ray died this year at age 73, and his wife, Mary, age 55, is the designated beneficiary on his Roth IRA. Ray's Roth IRA was established 3 years ago. Which of the following statements is(are) CORRECT? I Ray was not subject to required minimum distributions from his Roth IRA during his lifetime. II If Mary chooses to distribute the entire balance of the Roth IRA this year, the distribution may be subject to both regular income...
James and Molly are married couples, both 62 years old and both retired from their respective...
James and Molly are married couples, both 62 years old and both retired from their respective companies last year. Both James and Molly rolled their employer retirement accounts over into self-directed individual retirement accounts. James is starting withdrawals from his account this year. They are planning to hold off on withdrawals from Molly's account until the required age of 701/2. Their daughter jane has a child, a three year-old named Nancy. Molly and her husband are in the 25% tax...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT