Mia contributed $75,000 to a traditional IRA. She just retired at age 55 and would like to withdraw the funds. She is in the 15% federal marginal tax bracket. How much will she pay in income taxes on the funds?

Question

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Withdrawals from a traditional IRA before age 59½ are subject to ordinary income tax plus a 10% early withdrawal penalty. Mia's tax would be 15% of $75,000 ($11,250) plus a 10% penalty on $75,000 ($7,500), totaling $18,750.

Mia Contributed $75,000 to a Traditional IRA