Mindy, who is 44 years old, has five IRAs. On January 12th, she converts $40,000 in IRA 2, which is a traditional IRA, into a Roth IRA. On March 25th, she takes a distribution of $20,000 from IRA 1. On May 20th, she rolls over the $20,000 into IRA 4. Which of the following statements is correct? Mindy owes tax and penalty on $40,000 Mindy owes tax and penalty on the $20,000 because it represents her second rollover during the year. The $20,000 rollover qualifies for the 60-day rollover exception. Mindy owes ordinary income tax on $60,000 but no penalty.
Mindy, who is 44 years old, has five IRAs. On January 12th, she converts $40,000 in IRA 2, which is a traditional IRA, into a Roth IRA. On March 25th, she takes a distribution of $20,000 from IRA 1. On May 20th, she rolls over the $20,000 into IRA 4. Which of the following statements is correct? Mindy owes tax and penalty on $40,000 Mindy owes tax and penalty on the $20,000 because it represents her second rollover during the year. The $20,000 rollover qualifies for the 60-day rollover exception. Mindy owes ordinary income tax on $60,000 but no penalty.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Mindy, who is 44 years old, has five IRAs. On January 12th, she converts $40,000 in IRA 2, which is a traditional IRA, into a Roth IRA. On March 25th, she takes a distribution of $20,000 from IRA 1. On May 20th, she rolls over the $20,000 into IRA 4. Which of the following statements is correct?
- Mindy owes tax and penalty on $40,000
- Mindy owes tax and penalty on the $20,000 because it represents her second rollover during the year.
- The $20,000 rollover qualifies for the 60-day rollover exception.
- Mindy owes ordinary income tax on $60,000 but no penalty.
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