Question

Telly, age 38, has a $124,400 IRA with Blue Mutual Fund. He has read good things about the management of Green Mutual Fund, so he opens a Green Fund IRA. Telly asked for and received his balance from the Blue Fund on May 1, 2018. Telly opted to have no withholding on the distribution.

a. What is the total amount Telly will receive from the Blue Fund IRA?
$

In many situations, taxpayers need to transfer assets from one retirement plan to another plan of the same or different type. There are two ways this transfer can be accomplished: (1) direct transfer, also known as a trustee-to-trustee transfer, and (2) rollover of the distribution, in whole or in part, to an IRA or other qualified plan. There are potentially different tax treatments for the two types of transfers.

b. What amount must Telly contribute to the Green Fund IRA to avoid having taxable income and penalties for early withdrawal?
$

c. When is the last day Telly can roll over the amount received into the Green Fund IRA and avoid taxation in the current year, assuming no unusual circumstances?
June 30, 2018

d. What amount will Telly initially receive if the distribution were from his employer's qualified retirement plan?
$

Answer 1

a. Telly will receive $124400 from the Blue Fund IRA. b. Telly must contribute $124400 to the Green Fund RA to avoid having taxable income and penalties for early withdrawal. c. June 30, 2018 is the last days Telly can roll over the amount received into the Green Fund IRA and avoid taxation in the current year. d. Telly will receive 80% of $124400 =$99520 if the distribution were from his employers qualified retirement plan.