Jonathon,age 50 and in Good Health,withdrew $6,000 from His Pension

question 69

Multiple Choice

Jonathon,age 50 and in good health,withdrew $6,000 from his pension plan during the current year.The withdrawal was not eligible for any exception to the 10% penalty.Jonathon had made $40,000 of after-tax contributions to the plan while his employer had contributed $80,000.In addition to relevant income taxes,how much penalty must Jonathon pay?

• A)$0
• B)$200
• C)$400
• D)$600

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Definitions:

Exemption Clauses

Provisions in a contract that limit or exclude one party’s liability under certain circumstances.

Frustrated Contracts Act

Legislation that addresses situations where a contract, through no fault of the parties involved, cannot be fulfilled.

Deposit

Money prepaid with the provision that the funds are to be forfeited in the event of a breach of contract.

Condition Subsequent

A condition in a contract that, when occurring, can terminate the contract or alter its terms.