SIE Exam Question 543: Answer and Explanation

Question: 543

William, age 56, recently retired from Epsilon Inc., and would like to take a distribution from a retirement plan to pay for medical expenses. Which of the following plans would allow William to take a penalty free withdrawal?

• A. Single premium deferred annuity
• B. Traditional IRA
• C. Money purchase plan from his employer before Epsilon Inc.
• D. 401(k) from Epsilon Inc.

Correct Answer: D

Explanation:

Withdrawals from a 401(k) after separating from service are penalty free if the separation occurs at age 55 or older. The other options would result in an early withdrawal penalty.