The exception to the 10% penalty for a distribution related to an Emergency, only applies to $1,000. You would have the 10% early withdrawal penalty on any amount over $1,000.
The IRS says one distribution per calendar year for personal or family emergency expenses, up to the lesser of $1,000 or vested account balance over $1,000.
The second part of that sentence is confusing, because $1,000 is always going to be the lesser. I looked into it more and included the language below from the IRS Code along with the link.
Emergency personal expense distributions are subject to three limitations. First, section 72(t)(2)(I)(ii) provides that not more than one distribution per calendar year is permitted to be treated as an emergency personal expense distribution by any individual. Second, section 72(t)(2)(I)(iii) permits an individual to treat a distribution as an emergency personal expense distribution in any calendar year in an amount up to a maximum of $1,000. Third, section 72(t)(2)(I)(vii) provides rules that limit taking subsequent emergency personal expense distributions. IRS Link
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
