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Kathleen, age 56, works for MH, Inc. in Dallas, TX. Kathleen contributes to a Roth 401k and MH contributes to a traditional 401k on her behalf. Kathleen has contributed $30,000 to her Roth 401k over the past six years. The current balance in her Roth 401K account is $50,000 and the balance in her traditional 401k is $40,000. 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 28%. a. If Kathleen receives a $10,000 distribution from her traditional 401k account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? b. If Kathleen receives a $10,000 distribution from her Roth 401k 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 she receives a $10,000 distribution from her traditional 401k, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? d. If Kathleen retires from MH and then she receives a $10,000 distribution from her Roth 401k, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? e. Assume the original facts except that Kathleen is 60 years of age not 56. If Kathleen receives a $10,000 distribution from her Roth 401k (without retiring), how much will she be able to keep after paying taxes and penalties, if any, on the distribution?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M92048790

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