Sean (Age 74 at End of 2018) Retired Five Years

question 86

Essay

Sean (age 74 at end of 2018) retired five years ago. The balance in his 401(k) account on December 31, 2017 was $1,700,000 and the balance in his account on December 31, 2018 was $1,750,000. In 2018, Sean received a distribution of $50,000 from his 401(k) account. Assuming Sean's marginal tax rate is 25 percent, what amount of the $50,000 distribution will Sean have left after paying income tax on the distribution and paying any minimum distribution penalties (use the IRS table below in determining the minimum distribution penalty, if any).

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Definitions:

Deferred Contribution

Refers to contributions or payments that are postponed to a future date rather than being made immediately.

Net Assets

The total assets of a company or organization minus its total liabilities; an indicator of financial health.

Investment Income

Income generated from the allocation of funds into financial assets or properties expecting to gain profits.

Purchasing Power

The worth of a currency reflected by the quantity of goods or services a single unit of that currency can purchase.