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The taxpayer has three retirement accounts from different stages during the year. They withdraw $10,000 from an IRA and transfer it to aRoth IRA. They then withdraw $15,000 from the same IRA and transfer it to a new IRA. Lastly, they withdraw the remaining $10,000 from adifferent retirement account, a SIMPLE IRA, and transfer it also to the new IRA the same as the remainder balance from before. How muchof this is taxable and why?

a. $20,000, because the conversion of the IRA to a Roth is a conversion and will add $10,000 in taxable income to the return and the third transfer is over the annual limit for qualified rollovers.

b. $10,000, because the IRA to Roth IRA is a conversion, and the second withdrawal and rollover is also non-taxable. The third transfer is a prohibited transfer due to the once-per-year rule and is treated as a distribution, possibly even with an early distribution penalty.

c. $25,000, because the IRA to Roth IRA is always taxable and the third transfer violates the once-per-year rule for rollovers and is treated as a distribution, possibly even with an early distribution penalty.

d. $35,000, because the IRA to Roth IRA is always taxable *and* takes the spot of the once-per-year rule for rollovers, meaning both following transfers are prohibited from rollover treatment and are considered distributions, possibly even with an early distribution penalty.

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