In 2016,Billie decides to purchase a house by withdrawing $15,000 from his IRA.Brandan qualifies as a first-time home- buyer.The $15,000 consists of $12,600 in nondeductible contributions and $2,400 in income earned on the plan's assets.Billie will have to pay an early withdrawal penalty of
A)$-0-
B)$240
C)$500
D)$1,260
E)$1,500

Question

Quizplus · Accepted Answer

Since Billie is under age 59 1/2 and is not using the funds for a qualified reason (such as disability or certain medical expenses), he will have to pay an early withdrawal penalty of 10% on the $2,400 in earnings, which equals $240. Therefore, the correct answer is choice C.

In 2016,Billie Decides to Purchase a House by Withdrawing $15,000