uestion T of 75 age 50, Charles began receiving payments under a distribution me
ID: 2555315 • Letter: U
Question
uestion T of 75 age 50, Charles began receiving payments under a distribution method that provides for substantially equal payments over his lifte. He had no basis in the account. At age 58, after he had received dish $0 O $14,000 ? s155,000 $169,000 hen Miles seporated trom service with his tormer employer, he had a $10,000 outstanding balance in an employer plan loan. He received a total distribution of $30,000 without regard to the loan. The check $20,000 $30,000 uestion 9 of T5. a taxpayers peesion or annuity includes contributions that were previously included in gross income, the taxpayer may generaly Excude the distributions trom income, but only up to the amount of cost Use the simplited method to compute the tax-tree part of the payments i they began receiving payments after November 18, 1996 Assume Balthe taxtee part ofthe payment remanth.??te each year, even ifthe amourt ofthe payment charges Make all the choices linted above uestion 10 of 75 December 31, 2017 March 1, 2018 Apl 1, 2018 Apel 18, 201Explanation / Answer
1. Early withdrawal from qualified IRA is subject to penalty if it is withdrawn before 59.5 years of age.
So the 155000$ is subject to 10% penalty.
2. The total amount paid on redundancy is taxable. Hence it includes the value of loan and the redundancy payment. So 30000$ is taxable.
3. Use the simplified approach, if payments are received after march, 1996.
4. Required minimum withdrawals should be made each year after the person is 70.5 years of age.
So the deadline is April 1, 2018.
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