Ginger purchased a single-premium deferred annuity ten years ago at age 45. She used $40,000 of after-tax funds she had accumulated over fifteen years. She decides to surrender the annuity for a lump-sum distribution of its $90,000 value. Which of the following statements is correct?

Group of answer choices

Ginger will owe income taxes on $50,000

Ginger will owe income taxes on $90,000.

Ginger will owe income taxes and a 10% penalty on $90,000.

Ginger will owe income taxes and a 10% penalty on $50,000.