Jeremy, Age 38, Has $25,000 in a Traditional IRA Account

question 11

Essay

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2015 for this purpose? Explain.

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Definitions:

Account Category

A classification of accounts that organizes financial transactions within a ledger or financial statement.

Bank Charges

Fees charged by banks for various services and transactions, such as account maintenance, transfers, and non-sufficient funds.

Bank Reconciliation

The process of reconciling the checkbook balance with the bank balance given on the bank statement.

Phishing

Fake e-mails that attempt to obtain information about online banking customers.