Mike (age 40)is purchasing his second home for $200,000 with a 25% down payment.He will withdraw some of the down payment from his IRA.He will have to pay ____ on the IRA withdrawal.
A) federal income taxes
B) an early withdrawal penalty
C) Social Security taxes
D) a and b
E) a,b,and c

Question

Quizplus · Accepted Answer

Mike will have to pay both federal income taxes and an early withdrawal penalty on the IRA withdrawal, as it is considered a distribution before age 59½. He will not have to pay Social Security taxes on the withdrawal.

Mike (Age 40)is Purchasing His Second Home for $200,000 with a 25