If you separate from service during or after the year you turn 55, your early 401(k) distribution is exempted from the 10% penalty (but not from income tax).
Please read this TurboTax Help topic.
In TurboTax Online, please follow these steps:
- After you have entered all your forms 1099-R, on the 1099-R summary page, click Done
- Follow the interview until you arrive at the page titled Let's see if we can lower your tax bill. Click Continue
- On the next page, click the pen icon next to your name
- Continue the interview to the page These situations may lower your tax bill
- Enter the amount of the distribution in the box next to Separation from Service and click Continue
- Your early withdrawal penalty will be waived.
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