Question 6024 of 303 · California Life-Only Agent Exam

Early withdrawal from a nonqualified annuity before age 59 and a half is generally subject to

Exactly one answer is correct.

Ano tax and no penalty on any amount that is withdrawn early
Ba 50 percent penalty that is applied to all of the contributions
Cincome tax on earnings plus a 10 percent penalty
Da state transfer tax with no federal tax due on the amount

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Correct answer to question 6024

C: income tax on earnings plus a 10 percent penalty

Explanation

The IRS penalty applies to the taxable portion. Exceptions exist for death, disability, and annuitization.