Distributions from profit-sharing plan

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Reference no: EM132054580

1. Which of the following distributions from a profit-sharing plan would be subject to the 10% early withdrawal penalty, assuming the participant has not attained age 59½?

a. A distribution for a 50-year old spouse under a Qualified Domestic Relations Order (QDRO) pursuant to a divorce from the participant in the profit-sharing plan.

b. A distribution from the plan to pay income taxes due to a federal tax levy.

c. A distribution to pay for costs of higher education for a participant’s 18-year-old daughter.

d. A distribution made to the participant after he/she separated from service at age 57.

2. Colin receives a lump-sum distribution of employer securities (1,000 shares) from his stock bonus plan in Year 1 worth $140,000 ($140 per share). The total value of his employer contributions over the years was $30,000. Colin sells all of his distributed shares 3 months after he received it as a distribution from the qualified plan. He received proceeds of $150,000 from the sale. How much is Colin’s long-term capital gain upon sale?

a. $110,000

b. $120,000

c. $30,000

d. $40,000

Reference no: EM132054580

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