Reference no: EM132493070
Question 1: Marie has a $6,000 outstanding HBP balance against which she must make minimum payments of $1,000 for each of the years 2019 to 2024 inclusive, after which the plan's balance will be zero. If Marie doubles her annual payment in 2019 and pays $2,000 instead of the required minimum payment of $1,000, which one of the following statements is true?
Option 1: The extra $1,000 payment will reduce the outstanding balance to $4,000 and Marie's minimum repayment amount will be adjusted to $800 for each of the years 2020 to 2024 inclusive.
Option 2: The extra payment will be disallowed, as Marie must follow the original repayment schedule.
Option 3: The extra $1,000 payment will shorten Marie's minimum repayment schedule by one year as she will be required to continue the minimum $1,000 payments but with the last payment finishing in 2023.
Option 4: The extra payment will allow Marie to skip the 2020 payment without incurring a tax consequence.