Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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At what age can an individual begin withdrawing from an IRA without penalty?

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59 1/2
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65

The correct answer is: 59 1/2

An individual can begin withdrawing from an Individual Retirement Account (IRA) without facing a penalty at the age of 59 and a half. This age limit is set by the Internal Revenue Service (IRS) to encourage long-term savings for retirement. If withdrawals are made before reaching this age, individuals typically face a 10% early withdrawal penalty, in addition to any regular income tax that may be due on the distribution. It's important to note that IRA holders may opt to take distributions at various points in their lives, but the penalties are specifically designed to discourage early withdrawals, which could jeopardize their financial security in retirement. By waiting until at least 59 and a half, individuals can access their funds without incurring these additional costs, allowing for better planning and management of retirement savings.