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What reason does one select when a withdrawal was taken to pay for college tuition

I use to have the option in Turbo task in the past now it’s not there under 401k withdrawal reasons so I don’t know what to selevt
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3 Replies

What reason does one select when a withdrawal was taken to pay for college tuition

If you decide to use your employer-sponsored 401(k) for educational purposes, be aware of the rules and regulations that govern these early withdrawals, which are not penalty-free:

  • Typically, there is a 10% early withdrawal penalty for distributions made before 59½.
  • Since the money was invested tax-deferred, you’ll need to pay income tax on the withdrawn amount, and state taxes may also apply depending on your location. Typically a withdrawal counts towards your taxable income for the year, which could push you into a higher tax bracket.
Hal_Al
Level 15

What reason does one select when a withdrawal was taken to pay for college tuition

There is a penalty exception (the 10%) for taking an IRA distribution for tuition, but the tax is still due.

 

This exception is NOT available for 401k distributions (withdrawals).  You withdrawal will be taxed and subject to the 10% early distribution penalty. 

 

Q. What reason does one select when a 401k withdrawal was taken to pay for college tuition?

A. Early Distribution.  The plan administrator should have already put code 1 in box 7 of your 1099-R.  There is nothing more for you to do. 

What reason does one select when a withdrawal was taken to pay for college tuition

Thank you. 

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