1. RETIREMENT INVESTMENTS Investments 12.9

2. Vocabulary & other info. Individual Retirement Account(IRA) – An investment for retirement that matures with interest tax deferred. Deferred means income tax is paid later. Roth IRA – Mature with interest tax free. Money invested in an IRA is tax deductible, but not Roth IRA. Basically, you will be taxed going in or out. Not both. A penalty is paid if funds are: withdrawn before 59 ½ years, unless used for college or 1 st home purchased. not withdrawn before 70 ½ years of age. ( not Roth IRA ) IRA’s are not job-related retirement plans. I=Individual

3. Formulas Needed

4. Casey is 72 and has an IRA with a fair market value of $98,000. Use the uniform lifetime table to determine his required minimum distribution. What penalty would he incur if he failed to take the distribution? What penalty would he have paid if he had made an early withdrawal of $10,000 to take a vacation?

5. Alyssa is 70 and has Roth IRA with a fair market value of $156,800. Use the uniform lifetime table to determine her required minimum distribution. What penalty would she incur if he failed to take the distribution? What penalty would she have paid if he had made an early withdrawal of $20,000 to pay for a grandchildren’s college education?