A 55-year-old receives a $30,000 distribution from a previous employer's 401k plan, minus $6,000 for income tax withholding. If not rolled over, which federal taxes apply?

The correct choice indicates that both income taxes and an additional penalty tax apply to the distribution from the 401(k) plan. When an individual under the age of 59½ takes a distribution from a qualified retirement plan, such as a 401(k), the IRS generally imposes a 10% early withdrawal penalty tax on the amount withdrawn unless an exception applies. Since the individual in this scenario is 55 years old and is taking a $30,000 distribution, this penalty tax on the full amount is applicable.

Additionally, the distribution is subject to ordinary income taxes. The $6,000 withheld represents an estimate of the income tax that will need to be paid on the distributed amount. Therefore, when the person does not roll over the distribution and chooses to take the money, they will incur income taxes on the total distribution amount, as well as the 10% penalty tax on that same amount due to early withdrawal.

This approach highlights the significance of understanding the tax implications associated with early distributions from retirement accounts, which include both the income taxes owed and any applicable penalties.