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Betty took an early withdrawal of $6500 from a college savings plan and did not use...

Betty took an early withdrawal of $6500 from a college savings plan and did not use the money for qualified educational expenses. What amount of penalty will she pay on the early withdrawal? Group of answer choices

$650.

$325.

$0.

$780.

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Answer #1

If the withdrawn amount is not used for qualified educational expenses, then the penalty on the early withdrawal is 10%.

Penalty = Early withdrawal amount * 10%

Penalty = 6,500 * 10%

Penalty = $650

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