Chad plans on retiring in March of this year, and he and his wife would like to go to Rome for an extended 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 fun
Chad Boudreaux is a 58-year 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(k) plan that offers a Roth account and a separate ESOP. Chad has the following retirement plan accounts:
|
Account Description |
Current FMV |
Beneficiary |
|
ESOP account from CRP – consists of CRP shares. The cost basis for the shares is $75,000. |
$400,000 |
Patricia |
|
401 (k) Plan From CRP Inc. |
$800,000 |
Patricia |
|
401 (k) Plan from Schlumberger, where he worked in his thirties |
$90,000 |
Patricia |
|
Roth IRA (established in 2000 with a $2000 initial contribution; three years ago he rolled over a traditional IRA with a balance of $10,000 |
$45,000 |
Patricia |
|
Traditional IRA (established twenty years ago with $15,000 of after-tax contributions) |
$90,000 |
River |
|
Inherited IRA from the death of his Mama. She died in the same year Chad turned 50 years old. |
$120,000 |
River |
1. Chad plans on retiring in March of this year, and he and his wife would like to go to Rome for an extended 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?
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