Question

10 funds withdrawn before retirement from a profit sharing plan will always be subject to penalty.

true
false

Explanation:

Analyze the statement

Using the Early Withdrawal Penalties knowledge point

The statement claims that funds withdrawn before retirement from a profit-sharing plan will ALWAYS be subject to a penalty.

Identify exceptions to early withdrawal penalties

While early withdrawals from qualified retirement plans (like 401(k)s or profit-sharing plans) before age \(59\frac{1}{2}\) generally trigger a \(10\%\) IRS penalty, there are several key exceptions where the penalty is waived:

• Death or permanent disability of the participant.
• Substantially equal periodic payments (SEPP) under IRS Section 72(t).
• Medical expenses exceeding a certain percentage of adjusted gross income (AGI).
• Separation from service after reaching age \(55\).

Because these exceptions exist, early withdrawals are not always subject to a penalty.

Answer:

• True
• (B) False (Correct answer)