Question

# 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.

Step 1: Calculate non deductible portion

Non Deductible Portion= Non Deductible Contributions/Current balance of IRA

=40100/165851= 0.24(appx)

Step 2: Calculate taxable portion of Traditional IRA

Taxable Portion= 1- Non Deductible Portion

=1-0.24=0.76

Step 3: Calculation of Portion of Non Taxable Distribution

Non Taxable Distribution=Total Withdrawal from IRA Account- Taxable Portion* Withdrawal Amount

=29800-(0.76*29800)=\$7152

Hence \$7152 is the non taxable portion.

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