Tyson (48 years old) owns a traditional IRA with a current balance of $50,000. Thebalance consists of $30,000 of deductible contributions and $20,000 of account earnings. Convinced that his marginal tax rate will increase in the future, Tyson receives adistribution of the entire $50,000 balance of his traditional IRA and he immediatelycontributes the $50,000 to a Roth IRA. Assuming his marginal tax rate is 25%, what amount of penalty, if any, must Tyson pay on the distribution from the traditional IRA?

Question

Quizplus · Accepted Answer

The distribution from the traditional IRA is not subject to a penalty because Tyson immediately contributed the entire amount to a Roth IRA.

Tyson (48 Years Old) Owns a Traditional IRA with a Current