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Returning Member
posted Jun 3, 2019 12:38:09 PM

All of my 401K early withdraw was from matching employer contributions. Is it really still subject to all the taxes and fines assessed, or is some, or all of exempt?

The entire amount of my 401K early withdraw (cashed out, not reinvested) was from matching employer contribution and market earnings; every dollar that I had contributed had already been removed through previous early withdraws. After reading your help section of "Qualifying Retirement and Pension Benefits" I have to ask: Is this withdraw is really still subject to all the taxes and fines assessed, or is some, or all of exempt?


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1 Best answer
Expert Alumni
Jun 3, 2019 12:38:10 PM

Unfortunately, the entire distribution is taxable and, subject to additional 10% penalry if it is also an early withdrawal.  

There are a few, very specific exceptions (I'm inlcuding a link that lists them) to an early withdrawal.  Turbo Tax will ask you if you qualify for any of them, after the Form 1099-R is entered in Turbo Tax.  If you don't qualify for them, the entire amount is taxable and subject to an additional penalty, unfortunately.

https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Tax-on-Early-Distr...

1 Replies
Expert Alumni
Jun 3, 2019 12:38:10 PM

Unfortunately, the entire distribution is taxable and, subject to additional 10% penalry if it is also an early withdrawal.  

There are a few, very specific exceptions (I'm inlcuding a link that lists them) to an early withdrawal.  Turbo Tax will ask you if you qualify for any of them, after the Form 1099-R is entered in Turbo Tax.  If you don't qualify for them, the entire amount is taxable and subject to an additional penalty, unfortunately.

https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Tax-on-Early-Distr...