Cassandra, Age 33, Has Made Deductible Contributions to Her Traditional

question 156

Essay

Cassandra, age 33, has made deductible contributions to her traditional IRA over the years. When the balance in her IRA was $40,000, Cassandra received a distribution of $34,000 from her IRA in order to purchase a new car. How much of the $34,000 distribution will she have remaining after paying income taxes and early distribution penalties on the distribution? Her marginal tax rate is 25 percent.

---

Definitions:

Oceanic Crust

A thin layer of Earth's crust that lies beneath the ocean basins, composed mainly of basalt.

Elevation

The vertical distance of an object above or below a reference datum (usually mean sea level); generally the height of a ground point above sea level.

Green Mineral Olivine

A common silicate mineral found in the Earth's mantle, recognized by its olive-green color.

Continental Crust

The thick, generally granitic part of the Earth's crust that forms the continents and continental shelves, distinguished from the denser, thinner oceanic crust.