Please write a client letter to Peter Parker based on Memorandum 4 on the pictur
ID: 375401 • Letter: P
Question
Please write a client letter to Peter Parker based on Memorandum 4 on the picture below. Thank you. Memorandum #4 Peter Parker is brilliant. Even as a young boy he was always building strange contraptions. When he was twelve, he attached four mechanical arms to one of his action figures. He could control the arms with a remote control. He called the toy "The Octopus." When he was sixteen, he made his own Halloween costume. He dressed up as a spider and made wristbands that would shoot what looked like spider webs. He called himself Man Spider! For whatever reason, the action figures and crazy inventions did not make him very popular in school. But he had a heart of gold. Peter was creative and hardworking. Peter lost his father figure (his uncle) when he was fifteen. After that terrible event, Peter made his life's goal to learn and invent whatever he could. Peter graduated summa cum laude from a high school in New York. He then attended MIT, also graduating at the top of his class. Peter was a prodigy. Frankly he would have been a world class engineer in his early twenties if it wasn't for his first girlfriend dying after falling off a bridge. Peter took a while to fully recover After MIT, however, Peter was ready to focus on his work again. He obtained master and doctorate degrees in engineering from Stanford University. His achievements were truly outstanding. He was offered to continue at Stanford as a professor. Peter considered the offer, but he could never forget New York. After al he was a boy from Queens. He missed the buildings, the city life, the food, the people, and the craziness of it al. As a boy, he would just stare at the skyscrapers and picture himself swinging from them, going from building to building So, Peter took a job at New York University. He loved being in the heart of Manhattan! In fact, Peter is still working at NYU. Peter's contract with the university is clear. Peter is paid $150,000 yearly salary. Also, if Peter invents anything while employed by the university, the invention belongs to NYU. However, Peter is entitled to one-third of any royalties received by the university for his In 2017, Peter revisited his childhood's webshooter idea. He invented bracelets that can shoot a powerful glue. The glue can bind a person for up to one hour. The military became interested nearly immediately In 2017, the royalties for licensing the webshooters to the military started to come in. Peter estimates that by the end of 2017 he will have received $100,000 in royalties from NYU (in addition to his salary) To further complicate matters, 2017 was an unusual year in another respect. After moving back to New York, Peter ran into his old girlfriend. Her name is Mary Although her actress career did not work out, she is now a brilliant stock broker Although Peter has been dedicated to his work, he simply cannot stay away from Mary. Her red hair matches her fiery personality. There is a certain opposites attract dynamic that keeps the relationship alive despite multiple break ups throughout the years.Explanation / Answer
As we can see in the case of Peter, the fund in his IRA account is due to his inventions contributions and not because of some tax subsidized earnings, such contributions will be considered tax-free. So, we can say that withdrawal of IRA is tax free. Peter invested the funds in IRA since IRA often come as an attractive savings. He know that during his retirement, tax rate will be going up.
Roth IRA: Following are the key features of Roth IRA:-
1. Contributions are not taken as tax deductions
2. There are no taxes on withdrawals as well as earnings.
Considering qualification in case of Roth IRA: There is no age limit to open an IRA account, however, eligibility depends upon the income.
Non-deductible: The key features are as follows:-
1. Contributions are not tax-free.
2. One can commence withdrawing money from this account as soon as the individual turns 59. Withdrawals before 59 can be taken but with a penalty of 10%.
Exception in case of penalty:
If Peter had withdrawal after 5 years from the date of opening an IRA account, he would have got the merit of avoiding penalties. However, Peter withdraw before this time period, he would have to pay some penalty.