What are the tax consequences of this rollover

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Question - Carrie Ann is? single, age? 35, and wants to make a contribution to an IRA for the year ended December? 31, 2020. She is an active participant in a qualified retirement plan sponsored by her employer. Her AGI for 2020 is $133,000 before considering any IRA contribution.

Required -

a. What type of? IRA, if? any, is Carrie Ann eligible to make a contribution to for 2020?? If she is eligible to contribute to an? IRA, what is the maximum amount that she can contribute to the? IRA?

b. Assume Carrie Ann contributes a total of $11,000 over six years to a Roth IRA. In 2026?, she withdraws $15,000 to pay off her car loan. Her financial advisor suggested she withdraw the money from the IRA for two major? reasons: (1) to eliminate her debt and? (2) no tax would be due on distributions from a Roth IRA after five years. Carrie Ann wants to verify the accuracy of her? advisor's advice. What would be the tax consequences of this? withdrawal? Alternatively, what if Carrie Ann withdrew the $15,000 to purchase a house? (she is a? first-time homebuyer)?

c. Alternatively to Part b? above, assume Carrie Ann has a traditional deductible IRA that has a balance of $55,000. She has been able to deduct all of her contributions to the IRA in prior years. Her financial advisor has recommended that she rollover the funds from her traditional IRA to a Roth IRA in 2020. What are the tax consequences of this rollover in 2020??

Reference no: EM133140223

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