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