SIE (Securities Industry Essentials) Practice Exam

Barbara is a 56 year old that just lost her sanitation job and needs to withdraw money from one of her retirement accounts to make due. Which account would be best to withdraw from at the current time?

1. IRA

2. 401(k)

3. 457(b)

4. Roth IRA

The correct answer is: 457(b)

Barbara's situation is unfortunate, but she still has options to financially support herself. Of the four choices, the best account for Barbara to withdraw from at this time would be her 457(b) plan. An IRA and Roth IRA are individual retirement accounts that allow individuals to save for retirement. Both have tax advantages and can be withdrawn from at any time, but at age 56, Barbara would still need to pay income tax on the money withdrawn. A 401(k) is an employer-sponsored retirement plan, but there are typically penalties for early withdrawals before age 59 and a half. The 457(b) plan is also an employer-sponsored retirement plan, but it allows for penalty-free withdrawals at any age, as long as Barbara is no longer employed with the company. Therefore, the 457(b) plan would be the best option for Barbara at this time.