Which of the following statements is true regarding taxpayers receiving distributions from traditional defined contribution plans?
A)A taxpayer who retires at age 73 in 2020 must pay a required minimum distribution penalty if she does not receive a distribution in 2020.
B)The required minimum distribution penalty is 25 percent of the amount required to have been distributed.
C)A taxpayer who receives a distribution from a retirement account before she is 55 years old is subject to a 10 percent penalty on both the distributed and undistributed portions of her retirement account.
D)Taxpayers are not allowed to deduct either early distribution penalties or required minimum distribution penalties.

Question

Quizplus · Accepted Answer

The correct statement is that taxpayers are not allowed to deduct either early distribution penalties or required minimum distribution penalties. This is because penalties for not taking required minimum distributions (RMDs) or for taking early distributions before reaching a certain age are intended as disincentives for not following the rules associated with retirement accounts, and thus, are not deductible.

Which of the Following Statements Is True Regarding Taxpayers Receiving