TurboTax will ask about qualifying situations to reduce your early withdraw penalty if one is applied. See this IRS chart for exceptions to the early distribution penalty. The following exceptions are allowed for a 401K or IRA distribution:
- one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000 (made after 12/31/2023)
- up to $22,000 to qualified individuals who sustain an economic loss by reason of a federally declared disaster where they live
- after participant/IRA owner reaches age 59½
- amount of unreimbursed medical expenses (>7.5% AGI)
The exception for higher education expenses is only allowed for IRA accounts, not your 401k.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
