The early distribution penalty is 10% of the gross amount distributed.
The plan administrator is required to withhold 20% for federal income taxes on the distribution.
In January 2024 you will receive a Form 1099-R for the distribution. The form is entered on your federal tax return. Any federal taxes withheld are reported on your return as a tax payment. The taxable amount distributed is entered on your tax return as ordinary income.
The early withdrawal penalty is assessed on the federal tax return as a tax liability.
