This question has to do with timing
I turned 55 in 2021, so we are ok on that front.
I took a 401K withdrawal January of 2021 from a former employer 401K account.
I rejoined the same company full time from May through November of 2021...so, I did work for that company in 2021.
So, my question is, can I take advantage of Separation of Service to save the 10% penalty? Understanding that I withdrew the funds from a former employer 401K (at the time of the withdraw), yet I did work for them later in 2021.
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What code is in box 7 of the Form 1099-R?
"1" (one)
@codell777 wrote:
"1" (one)
Then the plan administrator has determined that the distribution was an Early distribution, no known exception
If you disagree then you need to contact the plan administrator to find out why the Form 1099-R was coded this way. If this was in error they will issue a corrected 1099-R.
Great...Sincere Thanks. I will reach out to the plan administrator.
This is an unusual situation that I have not seen discussed before. I'm leaning toward believing that the January 2021 distribution does not qualify for the penalty exception because the separation from service that qualified you for the age-55 exception occurred in November 2021 and not before. (I assume that your previous separation from service was not in January 2021.) Certainly at the time of the distribution there was no reason to believe that it qualified for the penalty exception.
Thank you for your help. I did contact the administrator and the situation did not qualify for Separation of Service due to the timing of events.
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