Question

A 68-year old retiree has a pension savings of $43,000, a 401k of $75,000, and an IRA account of $62,000. Before 2008, he had 2% more cash in the pension, 12% more in the IRA, and −1% in the 401k. He wants to take out 2% from each account before he turns 72, which will cost him a penalty of an extra 3% from the current total amount in his pension, 4% from the 401k, and 6% from the IRA. What is the highest amount that will be taken from a single account, including the penalty, if the retiree takes the money out now from each?

Answer 1

54280

Explanation:

2+6=8

.08 * 59000=4720

59000-4720=54280

Answer 2

The answer is the IRA

Explanation:

If he takes out 2% from each account, the highest penalty will be for the IRA account which is, 6% of 62,000 is $3,720. He will also take 2% of that 62,000 which will be $1,240. The total will be $4,960.

For the 401k account the withdrawal is $1,500 and the penalty is $3,000. That is $460 less than the IRA account.

I hope this answer helps.