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?

Question

Quizplus · Accepted Answer

10% of the distribution is not taxable ($20,000 nondeductible contributions divided by balance in account of $200,000). Taxable portion is 90% so taxable amount is $45,000 ($50,000 × 90%).

Jessica Retired at Age 65