Tom quits his job with $150,000 in his employer’s qualified retirement plan. Since he is broke, Tom instructs the plan trustee to pay him the balance in his retirement account. How much will Tom receive when he gets his check from the retirement plan?a. $120,000b. $100,000c. $96,000d. $24,000e. Some other amount

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Asked Nov 8, 2019
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Tom quits his job with $150,000 in his employer’s qualified retirement plan. Since he is broke, Tom instructs the plan trustee to pay him the balance in his retirement account. How much will Tom receive when he gets his check from the retirement plan?

a. $120,000

b. $100,000

c. $96,000

d. $24,000

e. Some other amount

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Expert Answer

Step 1

In case withdrawals are made from qualified retirement plan before a person reaches the age of 59½ years, a penalty of 10% is imposed along with the applicable taxes. However, this penalty may not be applied when the tax payer is under financial distress as allowed by the IRS. 

Step 2

In the given situation Tom's Age is not provided. However, irrespective of his age, the early withdrawal penalty from qualified retirement plan would not have applied as he is fin...

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