Scott, Age 68, Has Accumulated $850,000 in a Defined Contribution

question 56

Multiple Choice

Scott, age 68, has accumulated $850,000 in a defined contribution plan, $100,000 of which represents his own after-tax contributions. If the full amount is distributed in 2017, his early distribution penalty is:

• A)$0.
• B)$75,000.
• C)$85,000.
• D)$127,500.
• E)None of the above.

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Definitions:

Long-term

Pertaining to or occurring over an extended period, often exceeding one year, in the context of investments, loans, or planning.

Profit Margin

A financial ratio that measures the percentage of revenue remaining after all expenses have been deducted from sales.

Net Income

A company’s remaining income after total revenue has had taxes, expenses, and costs deducted from it.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks, which may provide income through dividends.