Are you having trouble answering the question “A 50 1/2 year old self-employed individual has a balance of $200,000 in his HR 10 plan. This balance is composed of $140,000 of contributions and $60,000 of earnings. The individual decides to withdraw $100,000 from the plan. Which statements are TRUE?”? You don’t have to worry about it anymore. Azanswer team is here with the correct answer to your question.
A 50 1/2 year old self-employed individual has a balance of $200,000 in his HR 10 plan. This balance is composed of $140,000 of contributions and $60,000 of earnings. The individual decides to withdraw $100,000 from the plan. Which statements are TRUE?
I The entire withdrawal is taxed as ordinary income
II Since half the account balance has been withdrawn, the withdrawal is taxed at 50% of ordinary rates
III The entire withdrawal is subject to a 10% penalty tax
IV Since half of the account has been withdrawn, the withdrawal is subject to half of the 10% penalty tax
A. I and III
B. I and IV
C. II and III
D. II and IV
Answer: A.
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