John established his first Roth IRA seven years ago and has made a total participant contribution of $6,500 so far. Four years ago, he also converted his Traditional IRA assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years old, healthy, and the balance in John's Roth IRA is $15,500. (a). If John withdraws $15,500 from his account to pay for vacation, is it a qualified distribution (answer yes or no)? (b). If John withdraws $15,500 from his account to pay for vacation, what amount is considered as participant contribution, taxable conversion, and earnings, respectively (in $)? participant contribution amount:$ taxable conversion: $ , earnings: $ (c). Following (b), what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ , early-distribution penalty obligation: $ (d). If John withdraws $15,500 to pay for his son's education, what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ ; early-distribution penalty obligation: $

John established his first Roth IRA seven years ago and has made a total participant contribution of $6,500 so far. Four years ago, he also converted his Traditional IRA assets ($6,000) to his Roth IRA (tax deduction was allowed when he contributed to his Traditional IRA and he has paid tax at the time of conversion). John is now 55 years old, healthy, and the balance in John's Roth IRA is $15,500. (a). If John withdraws $15,500 from his account to pay for vacation, is it a qualified distribution (answer yes or no)? (b). If John withdraws $15,500 from his account to pay for vacation, what amount is considered as participant contribution, taxable conversion, and earnings, respectively (in $)? participant contribution amount:$ taxable conversion: $ , earnings: $ (c). Following (b), what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ , early-distribution penalty obligation: $ (d). If John withdraws $15,500 to pay for his son's education, what amount is subject to income tax and what amount is subject to early-distribution penalty obligation? amount subject to income tax: $ ; early-distribution penalty obligation: $

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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