47. LO.6 Samuel, age 32, loses his job in a corporate downsizing. As a result of his termination, he receives a distribution of the balance in his § 401 (k) account of $20,000 ($25,000-$5,000 withholding) on May 1, 2009. Samuel’s marginal tax rate is 28%.
a. What effect will the distribution have on Samuel’s gross income and tax liability if he invests the $20,000 received in a mutual fund?
b. Same as (a) except that Samuel invests the $20,000 received in a traditional IRA within 60 days of the distribution.