**Understanding IRA Options for a 30-year-old****Question:**Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Explain. Consider any tax problems involved if the IRA funds are needed before age 59 1/2. Would your answer change for a 55-year-old individual?---**Advice for 30-year-olds:**Most tax advisors would suggest a 30-year-old individual establish:- **Option A: A Roth IRA rather than a traditional deductible IRA.** The main reason is that contributions to a Roth IRA are non-deductible, but both contributions and earnings grow tax-free. Given that the 30-year-old has 30 years before distributions are eligible to be made, a Roth IRA should experience significant growth, and all future distributions are not subject to tax. If there is an emergency and the funds are needed before age 59 1/2, contributions can usually be withdrawn without being subjected to taxation.- **Option B: A Roth IRA rather than a traditional deductible IRA.** The primary advantage here is that contributions to the Roth IRA are deductible, and the earnings grow tax-free. With nearly 30 years until eligible distributions, this setup allows significant growth, keeping future distributions tax-free. In an emergency where funds are needed early, contributions may still be withdrawn without tax penalties.- **Option C: A traditional deductible IRA rather than a Roth IRA.** The major benefit is the deductibility of contributions, with both contributions and earnings growing tax-free. Significant growth can occur over 30 years, and future distributions remain untaxed. If funds are needed before age 59 1/2 in an emergency, contributions can generally be withdrawn without tax implications.- **Option D: A traditional deductible IRA rather than a Roth IRA.** Here, contributions to the Roth IRA are non-deductible, but tax-free growth applies. With 30 years of potential growth, future distributions remain untaxed. In emergencies, early withdrawal of funds doesn't typically incur taxes.**Diagram Explanation:**No diagrams or graphs are present to explain further. The text focuses on narrative explanation regarding IRA types and their implications for different age groups.

The correct answer is: (C) A. a traditional deductible IRA rather than a Roth IRA. The major reason…

Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Explain. Consider any tax problems involved if the IRA funds are needed before age 59 1/2. Would your answer chan individual? Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Consider any tax problems involved if the IRA funds are needed before age 59 1/2. Most tax advisors would advise a 30-year old individual to establish

Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Explain. Consider any tax problems involved if the IRA funds are needed before age 59 1/2. Would your answer chan individual? Would you be more favorably inclined to advise a 30-year-old individual to establish a traditional deductible IRA or a Roth IRA? Consider any tax problems involved if the IRA funds are needed before age 59 1/2. Most tax advisors would advise a 30-year old individual to establish

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

8) Which types of taxes currently in law from today would JS Mill approve of? Why? taxeson wea death Tax income Tax not at the same Vate Which would he disapprove of and why? Discuss at least two he would approve of and two he would disapprove of.
6
A taxpayer can not claim the hefalth insurance premium tax credit if?
Which is the following is true about your pension? a) You can name someone other than your spouse as the beneficiary without your spouse knowing it b) You must have your spouse's permission to name somebody else as a beneficiary c) The funds in your pension plan disappear if you die prior to retirement. d) The person(s) named in your will have to be the same people named as beneficiaries of your pension plan. Which of the following statements is true? a. You are foolish to contribute to a 401k plan. b. You are foolish not to contribute to a 401k plan up to your employer's matching amount. Earnings on a 401k plan are taxed as they accumulate. d. Money going into a 401k plan is after tax money. c. Most public school teachers and governmental employees a. do not have a defined benefit pension plan b. are at the mercy of the stock market to determine the amount of pension they receive c. don't get a pension other than social security d. have a defined benefit pension plan
A taxpayer is trying to decide between two investments: a State of Vermont bond that will pay 3.20% interest annually or preferred corporate stock that will pay 3.75% dividends annually. What tax-related factors should the taxpayer consider in making their investment decision?
When taxpayers borrow money to acquire investments, the interest expense they pay on the loan is and the deduction is limited to the taxpayer's income for the year. expense
Which of the following statements regarding the tax deductibility of points related to a home mortgage is correct? (See image for answers)
Which one(s) is/are true for RRSP? (There might be more than one answer). Question 1 options: The Home Buyers' Plan (HBP) is a tax-free withdrawal from an RRSP account for persons who are deemed to be first-time home buyers. An eligible person is permitted to take an withdraw up to $35,000.00 from their RRSPs to purchase or construct a home for themselves. The LLP student must be enrolled on a full-time basis at the educational institution. Students can not be enrolled on a part-time basis under any conditions. Any contribution made to an RRSP within 89 days prior to the HBP request does not qualify to be part of the HBP program. Up to $5000 net per year, over four years, up to a maximum of $20,000 net, can be redeemed per spouse for purposes of the LLP.
Rosina can withdraw from her Registered Retirement Savings Plan (RRSP) with no tax impact but if she withdraws from her Tax-Free Savings Account (TFSA) she must include the amount on her tax return and pay taxes on it unless she uses the funds under the following two plans: Home Buyers Plan and Lifelong Learning Plan. A True False
the law imposes a 10% additional tax on early distributions from traditional and Roth IRAs unless an exception applies. Which of the following is not true regarding the 10% additional tax on early distributions?\\nA. Generally, early distributions are those a taxpayer receives from an IRA before reaching age 59(1)/(2)\\nB. A distribution that a taxpayer rolls over or transfers to another IRA or qualified retirement plan is not subject to this 10% additional tax\\nC. The additional 10% tax on early distributions from qualified retirement plans qualifies as a penalty for withdrawal of savings and can be deducted\\nD. The 10% additional tax applies to the part of the distribution that he or she has to include in gross incomev
Which one of the statement regarding itemized deductions in 2020 is false? Group of answer choices A.Itemized deductions provide relief to taxpayers whose ability to pay taxes has been involuntarily reduced. B.Itemized deductions subsidize desirable activities. C.Itemized deductions include medical expenses, taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses. D.Taxpayers only itemize deductions if they exceed their standard deduction.
Please do not give solution in image format ? And Fast answering please and explain proper steps by Step.