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30 May, 21:39

Jacque Solis (age 38) is leaving her current job and would like to take a long vacation before starting new employment. She has $65,000 in a qualified plan that she would like to live on during this period. If she is in a 25 percent marginal tax bracket, how much will she have left after paying taxes and penalties?

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  1. 30 May, 21:43
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    Jacque Solis will have $42250 left after paying taxes and penalties

    Explanation:

    given data

    present age = 38

    qualified plan = $65,000

    marginal tax = 25 %

    to find out

    how much will she have left after paying taxes and penalties

    solution

    as here qualified plan is an employer sponsored retirement plan that qualifies for special tax treatment under Section 401 (a) of Internal Revenue Code

    and tax for 25 % will be here as

    Tax 25% = $65,000 * 25%

    tax = $16,250

    and Penalties will be here for 10 % is

    Penalties 10% = $65,000 * 10%

    Penalties = $6500

    so

    Net available = $65,000 - $16,250 - $6500

    Net available = $42250

    so Jacque Solis will have $42250 left after paying taxes and penalties
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