Question

Tom quits his job with $120,000 in his employer's qualified retirement plan. since he is broke, tom instructs the plan trustee to pay him the balance of his retirement account. how much will tom receive when he gets his check from the retirement plan?
a. $120,000

Answer 1

Depends on the plan, did he pay taxes on it when he was paying to it or does he after, and if so what's the tax he must pay?

Answer 2

Answer:

$96,000

Explanation:

When you cash out your retirement plan, your employer must withhold 20% for taxes so you only receive 80%.

$120,000 x .80 =$96,000