All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT which?

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Multiple Choice

All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT which?

Explanation:
When you take an early distribution from a qualified retirement plan, it usually carries a 10% additional tax. Some withdrawals are exempt from that penalty, such as distributions to pay unreimbursed medical expenses, qualified higher education expenses, and distributions made if the account holder becomes permanently disabled. Using the withdrawal to purchase stock isn’t an eligible exception, so it would incur the 10% penalty. Keep in mind that the distribution may still be taxable as ordinary income depending on the plan type.

When you take an early distribution from a qualified retirement plan, it usually carries a 10% additional tax. Some withdrawals are exempt from that penalty, such as distributions to pay unreimbursed medical expenses, qualified higher education expenses, and distributions made if the account holder becomes permanently disabled. Using the withdrawal to purchase stock isn’t an eligible exception, so it would incur the 10% penalty. Keep in mind that the distribution may still be taxable as ordinary income depending on the plan type.

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