Heidi retired from GE (her employer)at age 56. At the end of the year, when she was 56 years of age, Heidi received a distribution from her GE-sponsored 401(k)account. Because Heidi was not at least 59½ years of age at the time of the distribution, she must pay tax on the full amount of the distribution and a 10 percent penalty on the full amount of the distribution.

Question

Quizplus · Accepted Answer

The statement is incorrect. While Heidi will have to pay tax on the full amount of the distribution, she may qualify for an exemption from the 10 percent penalty if she meets certain criteria, such as retiring at age 55 or older.

Heidi Retired from GE (Her Employer)at Age 56