Lars withdrew $20,000 from a retirement account and used the money to buy a new car. Assuming that his marginal rate on ordinary income is 32%, compute the tax cost of the withdrawal in each of the following cases.
a. Lars is 40 years old. He withdrew the money from a personal savings account.
b. Lars is 40 years old. He withdrew the money from his employer-sponsored qualified plan after resigning from his job.
c. Lars is 65 years old. He withdrew the money from a Roth IRA.

Question

Quizplus · Accepted Answer

The Answer of Lars withdrew $20,000 from a retirement account and used the money to buy a new car. Assuming that his marginal rate on ordinary income is 32%, compute the tax cost of the withdrawal in each of the following cases.
a. Lars is 40 years old. He withdrew the money from a personal savings account.
b. Lars is 40 years old. He withdrew the money from his employer-sponsored qualified plan after resigning from his job.
c. Lars is 65 years old. He withdrew the money from a Roth IRA.

Lars Withdrew $20,000 from a Retirement Account and Used the Money