Question

0 Required information Kathleen, age 56, works for MH, Inc., in Dallas, Texas. Kathleen contributes to a Roth 401(k) and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $33,600 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $56,000 and the balance in her traditional 401(k) is $44,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent o. If Kathleen receives a $12.500 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution 0 Required information Kathleen, age 56, works for MH, Inc. in Dallas, Texas. Kathleen contributes to a Roth 401(k) and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $33,600 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $56,000 and the balance in her traditional 401() is $44,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. b. If Kathleen receives a $12.500 distribution from her Roth 401k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net dist Required information Kathleen, age 56, works for MH, Inc, in Dallas, Texas. Kathleen contributes to a Roth 401(k) and MH contributes to a traditional 401(k) on her behalf Kathleen has contributed $33.600 to her Roth 401(k) over the past stx years. The current balance in her Roth 401(k) account is $56,000 and the balance in her traditional 401(k) is $44,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent c. If Kathleen retires from MH and then she receives a $12.500 distribution from her traditional 401(4), how much wll sthe be able to keep after paying taxes and penalties, if any. on the distribution? Net distribution 0 Required information Kathleen, age 56, works for MH, Inc, in Dallas, Texas. Kathleen contributes to a Roth 401(k) and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $33,600 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $56,000 and the balance in her traditional 401(k) is $44,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent d. If Kathleen retires from MH and then she receives a $12,500 distribution from her Roth 401(k), how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution 1 Required information Kathleen, age 56, works for MH, Inc., in Dallas, Texas. Kathleen contributes to a Roth 401(k) and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $33,600 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $56,000 and the balance in her traditional 401(k) is $44,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent e. Assume the original facts except that Kathleen is 60 years of age. not 56. If Kathleen receives a $12.500 401k) (without retiring), how much will she be able to keep after paying taxes and penalties, f any, on the distribution

Answer 1

Part A

Tax = (12500*24%) + additional tax for early withdrawal (12500*10%) = 4250

Net distribution = 12500-4250 = 8250

Part B

Amount not taxable = contribution/ current account * withdrawal = 33600/56000*12500 = 7500

Taxable amount = 12500-7500 = 5000

Tax = (5000*24%)+ additional tax for early withdrawal (5000*10%) =1700

Net distribution = 12500-1700 = 10800

Part C

Tax = (12500*24%) = 3000

Net distribution = 12500-3000 = 9500

Part D

Tax = (5000*24%) =1200

Net distribution = 12500-1200 = 11300

Part E

Net distributon = 12500