Per my 1099-R I had 10% Federal Income Tax withheld when doing an early withdrawal from my 403B but Turbo Tax still saying extra 10% for early withdrawal?

Forum|Forum|7 years ago
June 1, 2019
1 reply
26 views

On the 1099-R - Line 1 $3670.98, Line 2a $3670.98, Line 4 $367.10, Line 7 shows 1 for early distribution.

TurboTax Deluxe Online

Best answer by

The IRS requires that they withhold income tax of 10% when doing an early withdrawal from a retirement plan. HOWEVER, the 10% withholding is not directly related to the 10% early withdrawal penalty that is assessed on your tax return.

To discourage the use of retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that's includible in gross income. Generally, early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59½.

Distributions from a qualified retirement plan are subject to federal income tax withholding; however, if your distribution is subject to the additional 10% tax, your withholding may not be enough. You may have to make estimated tax payments. For more information on withholding and estimated tax payments, refer to Publication 505, Tax Withholding and Estimated Tax.

A

Anonymous

Answer

The IRS requires that they withhold income tax of 10% when doing an early withdrawal from a retirement plan. HOWEVER, the 10% withholding is not directly related to the 10% early withdrawal penalty that is assessed on your tax return.

To discourage the use of retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that's includible in gross income. Generally, early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59½.

Distributions from a qualified retirement plan are subject to federal income tax withholding; however, if your distribution is subject to the additional 10% tax, your withholding may not be enough. You may have to make estimated tax payments. For more information on withholding and estimated tax payments, refer to Publication 505, Tax Withholding and Estimated Tax.