SIE Exam Question 1022: Answer and Explanation

Question: 1022

Which of the following are among the exemptions from the 10% early withdrawal penalty from an IRA?

(1) Higher education costs for the account owner's child.

(2) Hardship withdrawals.

(3) A first-time home purchase up to $10,000.

(4) Separation from employment service at age 55 or older.

(5) A loan for medical expenses.

• A. (1) and (3) only
• B. (2) and (4) only
• C. (3) and (5) only
• D. (1), (3), and (4) only

Correct Answer: A

Explanation:

Qualified education costs and a first-time home purchase are among the exemptions from the 10% early withdrawal penalty from an IRA. Hardship withdrawals, and withdrawals made after separating from employment service at age 55 or older are permitted in 401(k) plans but not IRAs. Loans from IRAs are not allowed.