Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in

Question

2 years ago

14

Brooklyn has been contributing to a traditional IRA for seven years (all deductible contributions) and has a total of $30,000 in

the account. In 2019, she is 39 years old and has decided that she wants to get a new car. She withdraws $20,000 from the IRA to help pay for the car. She is currently in the 24 percent marginal tax bracket. What amount of the withdrawal, after tax considerations, will Brooklyn have available to purchase the car?

Business

2 answers:

miss Akunina [59] · Answer 1 · 2022-02-28T09:29:43+03:00

The correct answer is $13,200

Total amount contributed to IRAs for 7 years = $30,000
The amount she withdraws to get a new car = $20,000
Marginal tax bracket = 24 percent

<h2>Further Explanation</h2>

To determine the after tax withdrawal, you should subtract the amount she withdraws from her account from the 10% penalty charges (according to the condition of the Roth IRA withdrawal) and also subtract the derived value from the marginal tax bracket of the amount she withdraw.

Therefore, if you substitute the above values, then you have:

$20,000 - 0.1 × 20,000 - 0.24 × 20,000

= $20,000 - 2,000 - 4,800

= $13,200

In Roth IRAs (individual retirement account), your age and the reason why you withdrawal from your contributions determine how much you will pay as taxes.

Also, if you are not above 59 and half years of age, you will be penalized if you withdraw from your account. Since Brooklyn is not up to the age of 59 and half, then she will have to pay a 10% penalty for withdrawing from her IRAs account.

LEARN MORE:

Mindy has a Roth IRA held longer than 5 years to which she has contributed $30,000 brainly.com/question/13178480
Valerie deposited $2000 into an ira that grew to $5000 by retirement. brainly.com/question/4759212

KEYWORDS: