If there were distributions from your retirement account subject to a QDRO and you have not reached the age of 59 1/2 you can avoid the 10% Early Withdrawal Penalty by using Exception #6 while preparing Form 5329 - Additional Taxes on Qualified Plans.
Exception #6 - Qualified retirement
plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRAs).
To enter in TurboTax:
- After you enter your 1099-R you will come to a screen that says "What Did You Do With The Money From Payer"?
- Here you will indicate that you did something else with the money.
- Follow through the next few screens until you see: "These Situations May Lower Your Tax Bill"
- Enter the amount that was subject to the QDRO in the last box "Other Reason". This will eliminate the Federal and State penalty on that money.
