If a 55-year-old received a $30,000 distribution from a 401k plan without rolling it over, what federal taxes are applicable?

When a 55-year-old takes a distribution from a 401(k) plan without rolling it over, they are subject to federal income taxes on the amount withdrawn since this distribution is considered taxable income. Additionally, the IRS imposes a penalty for early withdrawals from retirement accounts before reaching the age of 59½. In this case, the individual is 55 years old, which means they would incur a 10% early withdrawal penalty on the distribution amount.

This penalty is designed to discourage individuals from using retirement funds for immediate needs, promoting the purpose of retirement savings. Therefore, both the federal income taxes on the distribution and the 10% early withdrawal penalty apply, making this the correct choice. Understanding this tax implication is crucial for individuals considering early distribution from retirement plans, as it affects the net amount they ultimately receive from their withdrawal.