A 401k is considered a qualified retirement account. According to the IRS, a 401K is a "A retirement plan that meets the requirements of Internal Revenue Code Section 401(a) is referred to as a "qualified plan." IRC Section 401(a) sets standards for retirement plans"
If you qualify for form 4972, you will have 5 options to choose from. See the options below provided by TurboTax:
- partial withdrawal as a capital gain and the remainder as ordinary income
- partial withdrawal as a capital gain. the remainder use the 10-year tax option
- use the 10-year tax option for the entire withdrawal
- roll over the distribution, and report any withdrawals as ordinary income
- report the entire distribution as ordinary income
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