Pennsylvania Life and Health Insurance Exam Practice Question
A withdrawal from a qualified plan will incur a 10% tax penalty if it is made
Correct Answer: A
Rationale: A: Withdrawals from a qualified plan before age 59 1/2 generally incur a 10% tax penalty, as this age is the threshold for penalty-free withdrawals.
B: Disability of the participant allows for penalty-free withdrawals regardless of age, making this option incorrect.
C: First-time home purchases typically apply to IRAs, not qualified plans, and do not incur penalties, thus making this option misleading.
D: Withdrawals to a former spouse due to a divorce decree are also exempt from penalties, confirming that this option does not incur the 10% tax penalty.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now