Question

Required information (The following information applies to the questions displayed below. 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 $44,540 to the IRA. Of his $44,540 contributions, $31,040 was nondeductible and $13,500 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: 0 % Non-taxable Taxable % Tax Rate Tax $ 0

Answer 1

Ans: A). if withdrawal is 20,000 and marginal tax rate= 24%

Particulars	Amount($)	Amount($)
Amount of withdrawal		20,000
Ratio of non-deductible contributions:
Non-deductible contributions	31,040
Total IRA Account Balance	160,000	19.40% *
Non taxable		3,880
Taxable (20,000-3,880)		16,120
Tax rate (given)		24%
Tax		3,869

*=31,040/160,000

=19.40%

B). if withdrawal= $70,000 and marginal tax rate=28%

Particulars	Amount($)	Amount($)
Amount of withdrawal		70,000
Ratio of non-deductible contributions:
Non-deductible contributions	31,040
Total IRA Account Balance	160,000	19.40% *
Non taxable		13,580
Taxable (70,000-13,580)		56,420
Tax rate (given)		28%
Tax		15,798