Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $40,080 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $66,800 and the balance in her traditional 401(k) is $51,200. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent.
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $40,080 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $66,800 and the balance in her traditional 401(k) is $51,200. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer the following
a. If Kathleen receives a $17,000 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution?
b. If Kathleen receives a $17,000 distribution from her Roth 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution?
c. If Kathleen retires from MH and then receives a $17,000 distribution from her traditional 401(k), how much will she be able to keep after paying taxes and penalties, if any, on the distribution?
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[The following information applies to the questions displayed below.]
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a
Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has
contributed $40,080 to her Roth 401(k) over the past six years. The current balance in her
Roth 401(k) account is $66,800 and the balance in her traditional 401(k) is $51,200. Kathleen
needs cash because she is taking a month of vacation to travel the world. Answer the
following questions relating to distributions from Kathleen's retirement accounts assuming
her marginal tax rate for ordinary income is 24 percent.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88a96ba6-18a1-4cda-8486-66763df4a14d%2Fd9e1618b-4ab7-4a46-a164-473894774554%2Fx6otxdg_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a
Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has
contributed $40,080 to her Roth 401(k) over the past six years. The current balance in her
Roth 401(k) account is $66,800 and the balance in her traditional 401(k) is $51,200. Kathleen
needs cash because she is taking a month of vacation to travel the world. Answer the
following questions relating to distributions from Kathleen's retirement accounts assuming
her marginal tax rate for ordinary income is 24 percent.
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Step 1: 401(k) Plan:
VIEWStep 2: (a) Determine the amount Kathleen able to keep after paying taxes and penalties:
VIEWStep 3: (b) Determine the amount Kathleen able to keep after paying taxes and penalties:
VIEWStep 4: (c) Determine the amount Kathleen able to keep after paying taxes and penalties:
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