what amount of taxes and/or early distribution penalties will Javier be required to pay on this distribution?
Hw.5.
Javier, who is 61 years old, had some surprise medical expenses during the year. To pay for these expenses (which were above the 10% of AGI threshold and claimed as itemized deductions on his tax return), he received a $20,000 distribution from his traditional IRA (he has only made deductible contributions to the IRA). Assuming his marginal ordinary income tax rate is 15 percent, what amount of taxes and/or early distribution penalties will Javier be required to pay on this distribution?
Multiple Choice
$0 income tax; $0 early distribution penalty
$3,000 income tax; $0 early distribution penalty
$0 income tax; $2,000 early distribution penalty
$3,000 income tax; $2,000 early distribution penalty
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