Steven Is 27 Years Old and Has a Total AGI

question 70

Multiple Choice

Steven is 27 years old and has a total AGI of $110,000 in 2014. In 2014, he gets pneumonia and has a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay for the bill. Which of the following is true?

• A)He is not subject to penalties on the IRA withdrawal because it was for medical expenses.
• B)He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks.
• C)He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what.
• D)He is subject to penalties on the IRA withdrawal because the medical bill was not greater than 10 percent of his AGI.
• E)None of the above is correct.

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Definitions:

Income Redistribution

The transfer of income from certain individuals or groups to others through mechanisms like taxation, welfare, and subsidies to promote economic fairness.

Incentives To Produce

Factors or motivations that encourage firms or individuals to engage in production, including profits, market demand, or regulatory conditions.

Stock Concept

A financial term referring to the ownership of shares in a company or the total value of goods available in inventory.

Flow Concept

Economic measures that are defined over a period of time, such as income or expenditure, contrasted with stock concepts measured at a point in time.