Funds withdrawn before retirement from a profit sharing plan will ALWAYS be subject to penalty.TrueFalse
Question
Funds withdrawn before retirement from a profit sharing plan will ALWAYS be subject to penalty.
True False
Solution
The statement "Funds withdrawn before retirement from a profit-sharing plan will ALWAYS be subject to penalty" is False.
While it is generally true that early withdrawals from a profit-sharing plan (like a 401(k)) before the age of 59½ may incur a 10% early withdrawal penalty, there are exceptions where no penalty applies. For example, if the withdrawal is made due to disability, certain medical expenses, or as part of a court-ordered separation, the penalty may not be enforced.
It is important to consider the specific rules of the retirement plan and IRS regulations, as they dictate when and how penalties apply. Always consult a financial advisor or tax professional for personalized advice regarding retirement funds.
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