Bubba Is Age 54 and Has Investments in a Retirement

Bubba is age 54 and has investments in a retirement plan with his former employer valued at $104,500. Bubba withdraws $25,000 to open a retail clothing store. Which of the following statements is true regarding Bubba's tax consequences?

A) the entire account is terminated and $104,500 is immediately taxable
B) a penalty of 10% of the withdrawn amount is assessed
C) a penalty of 10% on all assets in Bubba's account is assessed
D) only regular income tax is due on the amount withdrawn