Question
In 2021, Rashaun (62 years old) retired and planned on immediately receiving distributions (making withdrawals) from his traditional IRA account. The balance of his IRA
In 2021, 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 $120,000 (before reducing it for withdrawals/distributions described below). Over the years, Rashaun has contributed $34,300 to the IRA. Of his $34,300 contributions, $22,800 was nondeductible and $11,500 was deductible. Assume Rashaun did not make any contributions to the account during 2021.
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?
b. If Rashaun currently withdraws $70,000 from the IRA, how much tax will he be required to pay on the withdrawal if his marginal tax rate is 28 percent?
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