Jessica retired at age 65. On the date of her retirement, the balance in her traditional IRA was $200,000. Over the years, Jessica had made $20,000 of nondeductible contributions and $60,000 of deductible contributions to the account. If Jessica receives a $50,000 distribution from the IRA on the date of retirement, what amount of the distribution is taxable?

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DelcieRiveria DelcieRiveria · Answer 1 · 2019-08-20T15:22:47+02:00

Answer:

The taxable amount of the distribution is $45,000.

Explanation:

The balance in Jessica's account is $200,000.

The non-deductible contributions made is $20,000.

The deductible contributions made is $60,000.

The amount of distribution received is $50,000.

Non taxable amount percentage

=(non deductible contributions/balance in account)*100

=($20,000/$200,000)*100

=10%

Taxable amount will thus be 100-10=90% of the distribution

=$50,000*(90/100)

=$45,000.