In $2023,$ the administrator of Raye's Section $401($k$)$ plan allowed them to take a financial hardship distribution of $$20,000.$ How is this distribution treated on their $2023$ income tax return?The distribution is: Fully taxable and is subject to the $10\%$ early distribution penalty. Fully taxable, but the early distribution penalty is waived. Not taxable and not subject to the early distribution penalty. Subject to the early distribution penalty in $2022,$ but not subject to regular income tax as long as it is repaid within three years of the date of distribution.