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Taxation

Vivian (61) took a $5000 distribution from her Roth IRA . 20% or $100o is a distribution of earnings on her contributione. The remaining $4000 is a distribution from her basis. The account was esteblished 20 years ago. How much of her tistribution is taxable?.

$0

$1000

$4000

$5000.

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Answer #1

The correct answer for the question is Option A - $0. Per IRS, the withdrawals from a Roth IRA are generally not taxable if the taxpayer has met the two conditions of i.) Is aged 59.5 years and above and ii.) Has held the Roth IRA account for a minimum period of 5 yeras. Vivian has held the account for 20 years and is also above 59.5 years of age. Hence, this distribution is not taxable.

Option B, Option C and Option D are incorrect because , as explained above, the distributions from Roth IRA are generally not taxable if the above two conditions are met which has been met by Vivian

Please let me know if you have any questions via comments and all the best :) !

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