Answer to Question #84813 in Other for Qiangqiang

Question

Hello! Good morning! May I ask some questions for Accounting 401? Thank you very much!

1. Gene, age 34, and Beth, age 32, have been married for nine years. Gene, who is a college student, works part-time and earns $1,500. Beth is a high school teacher and earns a salary of $34,000. Their AGI is $37,000.
a. The maximum amount Gene can contribute to an IRA in 2018 is $.
b. The maximum amount Beth can contribute to an IRA in 2018 is $.

2. Samuel, age 32, loses his job in a corporate downsizing. As a result of his termination, he receives a distribution of the balance in his § 401(k) account of $20,000 ($25,000 – $5,000 Federal income tax withholding) on May 1, 2018. Samuel's marginal tax rate is 24%.

What effect will the distribution have on Samuel's gross income and tax liability if he invests the $20,000 received in a Roth IRA within 60 days of the distribution?
Samuel includes $( ) in his gross income and the related tax liability (ignoring penalties) is $ ( ).

Answer 1

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