Answered: Jimmy establishes a Roth IRA at age 47…

Jimmy establishes a Roth IRA at age 47 and contributes a total of $89,600 over 18 years. The account is now worth $112,000. How much of these funds may Jimmy withdraw tax-free?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

LO.6 Jimmy establishes a Roth IRA at age 47 and contributes a total of $89,600 over 18 years. The account is now worth $112,000. How much of these funds may Jimmy withdraw tax-free?

Expert Solution

Step 1

ROTH IRA stands for individual retirement account and wich use to save money for retirement. This account also have some tax advantages with some conditions.

As we have already paid tax on contribution, that's why there is no penalties on withdrawal.

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