Susan, age 52, withdrew $5,000 from her traditional individual retirement account, which consisted entirely of pretax contributions, to purchase her first home. What are the tax consequences?
A) Susan will not be assessed a 10% penalty if she pays back the funds within 60 days.
B) Susan must pay a 10% penalty plus income tax on the withdrawal.
C) Susan will not be assessed the 10% penalty on her early withdrawal.
D) Susan must pay a 10% penalty on the withdrawal.
Ans: C) Susan will not be assessed the 10% penalty on her early withdrawal.
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