What is the amount subject to the early distribution penalty for Charles after receiving distributions and a lump sum withdrawal?

In determining the amount subject to the early distribution penalty, it is crucial to consider the specifics of the distribution Charles received, particularly the nature and timing of these distributions. The early distribution penalty applies to withdrawals taken before reaching age 59½ from qualified retirement accounts unless certain exceptions are met.

If Charles’s total distributions, including the lump sum withdrawal, did not exceed his contributions or qualified for an exception (such as disability, medical expenses, or first-time home purchase), then the amount subject to penalty could indeed be zero. This would be the case if he had withdrawn only his contributions or if the distributions fit into one of the penalty-exempt categories.

In this scenario, if Charles's total distributions were accounted for properly and there were no taxable early distributions, or if all amounts withdrawn were non-taxable (such as returning contributions to a Roth IRA), it confirms that there would be no early distribution penalty.

Thus, the answer aligns with the situation where Charles either had no early distributions reportable for penalty purposes or qualified for an exception, resulting in a total amount subject to the early distribution penalty of $0.