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Over the years, Monica contributed $15,000 to a Roth IRA opened 10 years ago. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica?
A.$10,000B.$0C.$37,500D.$15,000E.$25,000

Answer :

Dryomys Dryomys

Today at 6:54 AM

Answer: Option (a) is correct.

Explanation:

For Roth IRA which was opened 10 years ago,

Monica contributed = $15,000

Current value of IRA = $37,500

Distribution = $25,000

There will no extra charged on withdrawal because its been more than 5 years.

If she was more than 59.5 years old then the entire withdrawal become tax free.

∴ The taxable distribution = Distribution - Monica contribution

= 25000 - 15000

= $10000

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