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.

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Definitions:

Classifying

Classifying involves arranging or organizing items into categories based on shared characteristics or properties.

Introversion

A personality trait characterized by a focus on internal feelings rather than external sources of stimulation; introverts often prefer solitary activities.

Agreeableness

A personality trait characterized by compassion, cooperativeness, and a desire to maintain positive social relationships.

Shyness

The feeling of apprehension or lack of comfort in social situations that may inhibit personal interaction.