15
QuizMultiple Choice

Individual Retirement Plans — Quiz

Question 15 • Financial Math

A 60 -year-old individual nearing retirement withdraws $⁢15,000 from their traditional IRA to pay for college expenses for their dependent child. What are the taxes and penalties on this withdrawal?

Answer
A
no penalty and no taxes
B
1 dollars comma 500 penalty and no taxes
C
1 dollars comma 500 penalty and taxed as ordinary income
D
no penalty and taxed as ordinary income

Explanation

Because the individual is 60, they are older than 59½, so the withdrawal is not subject to the 10% early-withdrawal penalty. However, money withdrawn from a traditional IRA is generally taxable as ordinary income. Therefore, the withdrawal has no penalty but is taxed as ordinary income.

AI-written and checked against the verified answer.

Previous
Next