Retirement tax questions
It depends. it would have been simpler if the code would have been entered as Code 2 but there is a way to waive the penalty. Here is how.
- When you enter your 1099R information, make sure you check the box that says the IRA/SEP/Box is checked.
- This is important especially if you are working in the online version of Turbo Tax. Because in a follow up screen it will ask if this is a SEP account.
- Now as the navigate through the screens, there will be a screen that asks if you used your IRA to pay any of these expenses. Here you will record the entire amount reported on your 1099R as equal periodic payments.
- Your penalty is now waived.
SEPP is set up on a Substantially Equal Periodic Payment plan. As long as you adhere to the conditions of the plan, your early withdrawal penalties will be waived. Here is a screenshot of the screen i mentioned earlier. The number that is illustrated there is for illustration purposes only.
