Lisa,age 45,needed some cash so she received a $50,000 distribution from her Roth IRA.At the time of the distribution,the balance in the Roth IRA was $200,000.Lisa established the Roth IRA 8 years ago.Through a rollover and annual contributions,she has contributed $80,000 to her account.What amount of the distribution is taxable and subject to early distribution penalty?
A)$0
B)$20,000
C)$30,000
D)$50,000

Question

Quizplus · Accepted Answer

Lisa will not owe any taxes or early distribution penalties on the $50,000 distribution from her Roth IRA because contributions made to a Roth IRA are made with after-tax dollars and are therefore not taxable when withdrawn. Additionally, she established the account more than 5 years ago, so the distribution is also qualified and not subject to the early distribution penalty.

Lisa,age 45,needed Some Cash So She Received a $50,000 Distribution