Which of the following distributions from a defined contribution plan would not

Question

Which of the following distributions from a defined contribution plan would not be subject to a premature distribution penalty?

Tyler, who is 28, leaves his current employer and has all the funds in his 401k distributed directly to him.

Marie, who is 57 and still working for her employer, takes a $10,000 distribution from her 401k.

Kim, who is 33 and files a joint return with her husband, takes a $3,000 distribution to pay for new carpet.

None, all would be subject to a penalty.

Tyler, who is 28, leaves his current employer and has all the funds in his 401k distributed directly to him.

Marie, who is 57 and still working for her employer, takes a $10,000 distribution from her 401k.

Kim, who is 33 and files a joint return with her husband, takes a $3,000 distribution to pay for new carpet.

None, all would be subject to a penalty.

Explanation / Answer

Ans - (d) part - None all would be subject to penalty .

Reason.;-

Distributions from 401k and defined contribution plan subject to premature penalty ,If they are taken before you attained age of 59 and half year subject to some exception .

A.tyler is under the age of prescribed limit and not used such funds for specific purpose mentioned in exceptions like medical ,health insurance etc.hence liable for penalty .

B.marie is also under age of such limit and amount withdrawn by her not used for such purpose like it is not for home purchase.hence liable for penalty .

C. Kim ,who takes $3000 for new carpet purpose that is not covered under the exceptions .hence liable for penalty .

D. As all the above person liable for penalty .hence correct part is D .

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