Bobby is a 35-year-old pharmacist who is changing jobs.He has decided to personally accept a check from his $30,000 retirement account and to roll it over into an IRA within 60 days.In this case,the check will be for ____,and to avoid taxes and penalties he will need to deposit ____ in the IRA.

Question

Quizplus · Accepted Answer

When an individual receives a distribution from a retirement account and the intent is to roll it over into another retirement account, the institution often withholds 20% for federal taxes. Therefore, Bobby would receive a check for $24,000 (80% of $30,000). To complete the rollover and avoid taxes and penalties, he must deposit the full $30,000 into the IRA, which means he will need to come up with the $6,000 that was withheld.

Bobby Is a 35-Year-Old Pharmacist Who Is Changing Jobs