FINRA Series 7 General Securities Representative Qualification Examination (GS) Series-7 Question # 87 Topic 9 Discussion
Series-7 Exam Topic 9 Question 87 Discussion:
Question #: 87
Topic #: 9
Bubba is age 54 and has investments in a retirement plan with his former employer valued at $104,500. Bubba withdraws $25,000 to open a retail clothing store.
Which of the following statements is true regarding Bubba’s tax consequences?
A.
the entire account is terminated and $104,500 is immediately taxable
B.
a penalty of 10% of the withdrawn amount is assessed
C.
a penalty of 10% on all assets in Bubba’s account is assessed
D.
only regular income tax is due on the amount withdrawn
a penalty of 10% of the withdrawn is assessed. Bubba also owes regular income tax on the withdrawn amount in addition to the 10% penalty for early withdrawal.
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