Scott, age 68, has accumulated $850,000 in a defined contribution plan, $100,000 of which represents his own after- tax contributions.If the full amount is distributed in 2019, his early distribution penalty is:
A)$0.
B)$75,000.
C)$85,000.
D)$127,500.
E)None of these.

Question

Quizplus · Accepted Answer

The penalty for early withdrawal from a defined contribution plan is 10%. However, Scott is over the age of 59.5, so he is exempt from the penalty. He will still owe income tax on the distribution, but there is no penalty for early withdrawal in this case.

Scott, Age 68, Has Accumulated $850,000 in a Defined Contribution