Withdrawals from 401(k) plans and other qualified retirement plans with pre-tax contributions are always taxable income. If you certify on your tax return that the withdrawal was due to a Covid related hardship, you are exempt from the 10% penalty for early withdrawal, but you still must pay the regular income tax.
You will receive a form 1099 – R, which must be mailed to you by January 31, or may be available for you to download from the plan trustee’s website. You will enter this as income on your tax return. If the plan trustee withheld some tax from the withdrawal, this is only an estimate and does not represent the full amount of tax that you owe. You will get credit for the withholding and after your taxes are calculated, if you had too much withheld you will get a refund and if you did not have enough withheld you will owe more tax.
