Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

An exemption from the 10% penalty for early distributions is generally triggered by specific circumstances that the IRS recognizes as qualifying conditions. One such condition is permanent disability. When an individual becomes permanently disabled, they are allowed to access their retirement funds without incurring the additional penalty, even if they are under the age of 59½. This provision acknowledges that individuals who are unable to work due to a disability may need to access their savings to cover living expenses or medical care.

Other options such as a change of career, investment losses, or change of residence do not qualify for penalty exemptions under IRS rules. While these circumstances might impact an individual's financial situation, they do not meet the predefined criteria that would allow for an early withdrawal without penalty. Thus, the recognition of permanent disability as a valid reason for penalty-free access aligns with the overarching goal of supporting individuals in dire circumstances, making it the correct answer in this context.