Jacque Solis, a 38-year-old, is leaving her current job and would like to take a long vacation before a new job. She has $62,000 in a qualified plan that she would like to live on during this period. If she is in a 25% marginal tax bracket, how much will she have left after paying taxes and penalties?

Question

Quizplus · Accepted Answer

Since Jacque is under 59 1/2 years old, she will face a 10% early withdrawal penalty on the $62,000, in addition to her marginal tax rate of 25%. The total deductions from her withdrawal will be 35% (25% + 10%). Thus, 35% of $62,000 is $21,700. Subtracting this from the original amount, $62,000 - $21,700 = $40,300.

Jacque Solis, a 38-Year-Old, Is Leaving Her Current Job and Would