Max retired in 2014 at age 62.During the year he received distributions of $9,000 from his IRA.He made nondeductible contributions of $20,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of his IRA was $150,000.Calculate the taxable portion of Max's distribution.

Question

Quizplus · Accepted Answer

The taxable portion is calculated by subtracting the nontaxable portion from the total distribution. The nontaxable portion is determined by the ratio of nondeductible contributions to the total IRA value. ($20,000/$150,000) x $9,000 = $1,132 nontaxable. Therefore, $9,000 - $1,132 = $7,868 taxable.

Max Retired in 2014 at Age 62