I made post tax contribution to my 401K from 2021 September to 2022 March. I withdrew the money in Apr 2022 to pay for down payment on our house. I haven't made any earnings on this money. I lost 3% due to this withdrawl. I forgot to mention about this post tax withdrawl in my tax 2022 tax filing.
Last month in 2025, I got a CP2000 letter from IRS asking me explain this distribution from year 2022. IRS is asking me to pay both tax and early withdrawl penalty with interest. I responded to that letter saying that the distribution was related to post tax and attached 1099R, 401k statements. But IRS responded again with very vague letter not mentioning what specifically wrong in my explanation. One paragraph says additional 10% tax on early distribution very generally and other paragraph says that to do a amended return with new information.
After this letter, I tried using my turbotax 2022 desktop version to file amended return and I entered all the information from 1099R (Box 1 and Box5 are same amount and Code 1 for Box 7). This did not change my total taxable amount which is understandable as my withdrawl is related to post tax. It also did not add any early withdrawl penalty.
Am I expected to pay early withdrawl penalty for this distribution although it is post tax? When I spoke to one of the expert, they told me that I still have to pay the early withdrawl penalty as the distribution was before December 29, 2022. But when I do amended return in 2022 turbotax desktop version, it won't show this penalty. What would be the right move here? Just file 2022 amended return with 1099-R information included? or accept that 10% early withdrawl penalty (This would make turbotax 2022 software wrong)?
