Formula to calculate the gross-up withdrawal amount to include the IRA 10% penalty and the tax on distribution.

Forum|Forum|4 years ago
September 21, 2021
2 replies
20 views

TP wants to receive an early distribution of $16,000 and he is subject to 10% penalty ($1,600) and his marginal tax rate is 24% ($3,840).
What is the gross-up amount TP needs to liquidate in order for him to get $16,000, to withhold 10% penalty ($1,600) and 24% tax ($3,840)?

Thanks for your time and advice.

ProConnect Tax

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Best answer by The Real Halloween

Awesome! @sjrcpa Thanks a lot!

sjrcpa

Level 15

$24,242.

10% penalty $2,424

24% tax $5,818.

The more I know the more I don’t know.

T

The Real HalloweenAuthorAnswer

Level 6

Awesome! @sjrcpa Thanks a lot!

George4Tacks

Level 15

@The Real Halloween How did you manage to pick your own thank you as a solution?
@sjrcpa gave the solution to the Algebra problem of:
X - .1X - .24 X = $16,000 and you snub her is two ways!
(a) you did not click the thumbs up for her attempt at answering and (b) you ignore the fact that that she and not you gave the correct answer.
I fear there shall be no happy Halloween for me this year.

Answers are easy. Questions are hard!

IRonMaN

Level 15

Halloween - I’m sure Susan Is just crushed that you “stole” the solution from her😉. Believe it or not you are not the first person to do that, although you might be the first holiday to have accomplished that feat😁. Whenever I see that happen I always smile thinking how well Intuit has created a foolproof system for its customer base👍

Edit - for the record, I have done that deed a couple of times to make a point of how silly it is for someone to be able to pat themselves on the back (for those that do it intentionally)

Slava Ukraini!

sjrcpa

Level 15

I got over it pretty quickly.

The more I know the more I don’t know.

abctax55

Level 15

Susan, I got a silly 'solve' the other day...& you posted the best answer (Or someone else did..) I'll transfer it to you if I can 😍

HumanKind... Be Both

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