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 an individual retirement account (IRA) 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

Jacque will face both income taxes and a 10% early withdrawal penalty for taking money out of her IRA before age 59½. The total deductions from her withdrawal will be 25% (income tax) + 10% (penalty) = 35%. Therefore, she will have 65% of her $62,000 left, which is $62,000 * 0.65 = $40,300.

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