Practice Quiz

FINRA Series 7

Category - Series 7

Start a Study Session Sign up for Question of the Day
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?
  1. the entire account is terminated and $104,500 is immediately taxable
  2. a penalty of 10% of the withdrawn amount is assessed
  3. a penalty of 10% on all assets in Bubba’s account is assessed
  4. only regular income tax is due on the amount withdrawn
Explanation
Answer: B - a penalty of 10% of the withdrawn is assessed. Bubba also owes regular income tax on the withdrawn amount in addition to the 10% penalty for early withdrawal.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz