Patty Planner Has Been Contributing a Sum to a Non-Qualified

Patty Planner has been contributing a sum to a non-qualified variable annuity each month for the last fifteen years in order to reach her ultimate goal of an early retirement. Now that she has turned 60, Patty has decided to retire. Her annuity is now worth $69,000, and her total contributions were $36,000.Patty decides to withdraw $15,000 of her accumulation as a lump sum to fund an extended vacation to Europe that she has always promised herself. Which of the following statements applies to Patty's situation?

A) Her $15,000 withdrawal will be taxed as capital gain income, at a preferential rate, but she will also have to pay a 10% penalty for withdrawing the funds prior to turning 62.
B) Her $15,000 withdrawal will be taxed as ordinary income to her at her marginal tax rate.
C) Her $15,000 withdrawal is not taxable since it is less than the amount of her total contributions to the plan, but she will be subject to a 10% penalty for early withdrawal.
D) Her $15,000 withdrawal will be taxable as ordinary income to her at her marginal tax rate, and she will also be subject to a 10% penalty for early withdrawal.