Question
7. Thomas is 49 years old and has a Roth account balance in his employers 401(k) plan. On August 11th he took a distribution of
7. Thomas is 49 years old and has a Roth account balance in his employers 401(k) plan. On August 11th he took a distribution of $100,000 from the account to buy himself a sports car. At that time, his adjusted basis in the plan was $600,000 and the Fair Market Value was $1,000,000. What is the taxable amount of the distribution, and the amount of the tax penalty?
a. $0 taxable, $0 penalty b. $40,000 taxable, $4,000 penalty c. $40,000 taxable, $0 penalty d. $100,000 taxable, $10,000 penalty
ANSWER #7 _______
8. Which of the following are benefits of converting traditional 401(k) balances to a Roth account within a qualified plan through an in-plan Roth rollover?
i. The conversion may result in a reduction in income tax in future years. ii. The conversion will result in increasing after-tax deferred assets and reducing the
gross estate. iii. The conversion will eliminate the need for minimum distributions during the life of
the participant.
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iandii
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ii and iii
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i and iii
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i, ii and iii
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