John established his first Roth IRA seven years ago and has made a total participant contribution of $6,500 so far. Four years ago, he also converted his Traditional IRA assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years old, healthy, and the balance in John's Roth IRA is $15,500. (a). If John withdraws $15,500 from his account to pay for vacation, is it a qualified distribution (answer yes or no)? (b). If John withdraws $15,500 from his account to pay for vacation, what amount is considered as participant contribution, taxable conversion, and earnings, respectively (in $)? participant contribution amount:$ taxable conversion: $ , earnings: $ (c). Following (b), what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ , early-distribution penalty obligation: $ (d). If John withdraws $15,500 to pay for his son's education, what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ ; early-distribution penalty obligation: $
John established his first Roth IRA seven years ago and has made a total participant contribution of $6,500 so far. Four years ago, he also converted his Traditional IRA assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years old, healthy, and the balance in John's Roth IRA is $15,500. (a). If John withdraws $15,500 from his account to pay for vacation, is it a qualified distribution (answer yes or no)? (b). If John withdraws $15,500 from his account to pay for vacation, what amount is considered as participant contribution, taxable conversion, and earnings, respectively (in $)? participant contribution amount:$ taxable conversion: $ , earnings: $ (c). Following (b), what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ , early-distribution penalty obligation: $ (d). If John withdraws $15,500 to pay for his son's education, what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ ; early-distribution penalty obligation: $
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 2BCRQ
Related questions
Question
Transcribed Image Text:John established his first Roth IRA seven years ago and has made a total participant contribution of $6,500 so far. Four years ago, he also converted his Traditional IRA
assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years
old, healthy, and the balance in John's Roth IRA is $15,500.
(a). If John withdraws $15,500 from his account to pay for vacation, is it a qualified distribution (answer yes or no)?
(b). If John withdraws $15,500 from his account to pay for vacation, what amount is considered as participant contribution, taxable conversion, and earnings, respectively (in
$)? participant contribution amount:$
taxable conversion: $
earnings: $
(c). Following (b), what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $
7. early-distribution penalty obligation: $
(d). If John withdraws $15,500 to pay for his son's education, what amount is subject to income tax and what amount is subject to early-distribution penalty
obligation? amount subject to income tax: $
: early-distribution penalty obligation: $
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
