In 2013,Jessica retired at the age of 65.The current balance in her traditional IRA was $200,000.Over the years,Jessica had made $20,000 of nondeductible contributions and $60,000 of deductible contributions to the account.If Jessica receives a $50,000 distribution from the IRA,what amount of the distribution is taxable?
A)$0
B)$5,000
C)$37,500
D)$45,000
E)$50,000

Question

Quizplus · Accepted Answer

The taxable portion of the distribution is calculated by subtracting the nondeductible contributions from the total distribution. The nondeductible contributions are $20,000, so the taxable portion of the $50,000 distribution is $50,000 - ($20,000/$80,000 * $50,000) = $45,000.

In 2013,Jessica Retired at the Age of 65