What Would Be the Difference in the Tax Consequences of an $18,000

question 90

Essay

What would be the difference in the tax consequences of an $18,000 withdrawal from a Roth IRA versus a Traditional IRA if $15,000 represents long-term capital gains,$2,000 short-term capital gains,and $1,000 is interest? Assume a tax rate of 30 percent and a capital gains tax rate of 10 percent.
(a)$5,200 more in taxes with a Traditional IRA
(b)$4,800 more in taxes with a Traditional IRA
(c)$5,400 more in taxes with a Traditional IRA
(d)$5,400 more in taxes with a Roth IRA

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Definitions:

Marginal Social Benefit

The additional gain to society as a whole from an additional unit of a good or service, considering both private benefits and externalities.

Marginal Benefit Curve

The Marginal Benefit Curve is a graphical representation showing how the benefit or utility from consuming each additional unit of a good decreases as more units are consumed.

Government Intervention

Regulatory actions taken by a government in order to affect or interfere with decisions made by individuals, groups, or organizations regarding economic and social matters.

Marginal Cost

The cost of producing one additional unit of a product or service.