Heidi, Age 45, Has Contributed $20,000 in Total to Her

question 99

Multiple Choice

Heidi, age 45, has contributed $20,000 in total to her Roth 401(k) account over a six-year period. When her account was worth $50,000 and Heidi was in desperate need of cash, Heidi received a $30,000 nonqualified distribution from the account. How much of the distribution will be subject to income tax and 10 percent penalty?

• A)$0.
• B)$10,000.
• C)$12,000.
• D)$18,000.
• E)$30,000.

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Definitions:

Equitable Assignment

A transfer of rights or benefits from one party to another, recognized by equity courts even if not formally executed.

Vicarious Performance

A situation where an individual or entity performs a duty or obligation through another party, who acts on their behalf.

Assignment

The transfer of rights, duties, or interests under a contract or agreement from one party to another.

Money Damages

A sum of money awarded in compensation for loss or injury in a civil lawsuit.