Final answer:
The typical penalty for early withdrawal from retirement plans like 401(k)s and 403(b)s is a fixed 10% penalty imposed by the IRS on top of applicable income taxes. The correct option is b. A fixed percentage
Step-by-step explanation:
The penalty on an early withdrawal from a retirement plan, not including exceptions, is typically b. A fixed percentage. Most retirement accounts, such as 401(k)s and 403(b)s, which are defined contribution plans, come with a standard early withdrawal penalty imposed by the Internal Revenue Service (IRS).
This penalty is usually 10% of the distributed amount if taken before the age of 59½, in addition to the regular income tax that may apply.
These plans allow for both employer and employee contributions and provide benefits such as tax deferral and portability when changing employers.
However, withdrawing funds prematurely from these accounts can lead to significant penalties and should be carefully considered to avoid financial setbacks. The correct option is b. A fixed percentage