1. Chad plans on retiring in March of this year, and he and his wife would like to go to Spain for a vacation. He wants to take a distribution of $20,000 from one of his retirement accounts to pay for the vacation. Which of his retirement plans would allow him to take a penalty-free withdrawal to fund his vacation? 

2. If the balance in Chad’s Mom’s IRA was $120,000 at the end of last year and $140,000 at the end of this year. How much, if any, must he take out from this account to satisfy the minimum distribution rules?

3. Assuming Chad decided to take out a $20,000 distribution from his Roth IRA to pay for the vacation, what are the tax implications?

4. If Chad retires, what should he do with the CRP shares and why?

 

Chad Boudreaux is a 58-year old riverboat captain. He grew up in New Orleans and has worked on the Mississippi River his entire life. He works for a private company in New Orleans called Crescent River Pilots Inc. (CRP) and is married to Patricia, who is 35 years old. They have a seven-year-old son, named River. CRP sponsors a 401 and is that offers a Roth account and a separate ESOP. Chad has the following retirement plan accounts: Account Description Current FMV Beneliciary ESOP account from CRP - consists of CRP shares. The cost basis for the shares is $75,000. 401(k) Plan From CRP Inc. 401 (k) Plan from Schlumberger, where he worked in his thirties Roth IRA (established in 2000 with a $2,000 initial contribution; three years ago he rolled over a traditional IRA with a balance of $10,000 Traditional IRA (established rwenty years ago with $15,000 of after-tax contributions) Inherited IRA from the death of his Mama. She died in the same year Chad turned 50 $400,000 Patricia $800,000 Patricia $90,000 Patricia $45,000 Patricia $90,000 River $120,000 River years old.