Pierre retired in 2014 at age 62.During the year he received distributions of $27,000 from his IRA.He made nondeductible contributions of $60,000 to the IRA in prior years and has never received a nontaxable distribution.As of December 31,2014,the value of his IRA was $450,000.Calculate the taxable portion of Pierre's distribution.

Question

Quizplus · Accepted Answer

To calculate the taxable portion of Pierre's distribution, we need to use the IRS Formula for IRA Distributions. 
The formula is: 
(Total IRA balance / Expected remaining years of life) x (1 - nontaxable contributions / Total IRA balance)
 
Total IRA balance = $450,000
Expected remaining years of life = based on the IRS Single Life Expectancy Table, Pierre's life expectancy at age 62 is 20.2 years.
Nontaxable contributions = $60,000

Using these values in the formula, we get:
(450,000 / 20.2) x (1 - 60,000 / 450,000) = $23,604

Therefore, the taxable portion of Pierre's distribution is $23,604. The correct answer is D.

Pierre Retired in 2014 at Age 62