Tyson (48 Years Old)owns a Traditional IRA with a Current

question 122

Multiple Choice

Tyson (48 years old) owns a traditional IRA with a current balance of $50,000. The balance consists of $30,000 of deductible contributions and $20,000 of account earnings. Convinced that his marginal tax rate will increase in the future, Tyson receives a distribution of the entire $50,000 balance of his traditional IRA and he immediately contributes the $50,000 to a Roth IRA (not a coronavirus-related distribution) . Assuming his marginal tax rate is 25 percent, what amount of penalty, if any, must Tyson pay on the distribution from the traditional IRA?

• A)$0.
• B)$1,250.
• C)$3,750.
• D)$5,000.

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