@Angiebaby0914 wrote:
What happens if I took this credit with only a 401k? Did my research and didn't see this response until I had already filed claiming the QBAD.
It's not a credit, its an exemption from the penalty. If you withdrew money from your 401(k) after your child was born, you will receive a 1099-R from the plan sponsor. When you enter the 1099-r, Turbotax will tell you that you may owe a 10% penalty for early withdrawal, and will show you a list of boxes to check for special circumstances that qualify for an exemption to the 10% penalty. If "birth of a child" is listed, you can check that box and you will not be assessed the additional 10% penalty on the first $5000 of the withdrawal.
I remain unsure of whether the exception is available to 401k plans or only other types of plans. One page of the IRS guidance lists eligible plans and 401k plans are not listed, but another page of the guidance seems to indicate that 401k plans are eligible. Turbotax should know what kind of plan you withdrew funds from, from the codes listed on the 1099-R, so if Turbotax gave you the choice of claiming the exception for birth of a child, then I would assume the accountants at Turbotax think 401k plans are eligible.
