Can I report that my 401K distribution was for a relative's death or my death?

[Cyndee510]

I had to take a hardship withdrawal to pay for my grandmother's funeral.  Do I need to pay the additional tax for this or is it only for my death that I don't need to pay the additional tax?

[PaulaM]

I am sorry for the passing of your grandmother.

The IRS definition of a hardship is specific and is requested from your employer at the time of the withdrawal. Generally, you would demonstrate a hardship need to your employer and they would approve the distribution according to plan rules. If you received a 1099-R, enter it as it is reported as this form is also issued to the IRS.

Although hardship withdrawals are permitted for funeral expenses for you, a spouse, or your dependent, there is no exception to waive the penalty for those expenses. See@dmertz comment below

[edited 1/23/17]

https://ttlc.intuit.com/questions/1901285-can-i-make-a-hardship-withdrawal-from-my-401-k

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-hardship-distributions#2

[Cyndee510]

great... thank you - but it says that Turbo Tax will determine the taxes for the withdrawal but it says that for some reasons you won't get penalized... and one of the reasons says "IRS tax levy's or death".... a relative's death or the person filing the taxes death (me)?

[PaulaM]

What are the distribution codes on the 1099-R?

[Cyndee510]

1 (for my regular 401K) and 1B (for my Roth 401K)

[PaulaM]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-hardship-distributions#5">https... IRS link says that hardship withdrawals would be included in income except for a designated Roth distribution. The code 1B you listed above is such.

[Cyndee510]

I understand that part - I'm just asking where it lists "Funeral" under the choices where it says that Turbo Tax will determine the taxes for the withdrawal... would it be MY funeral or a funeral of a relative?

[dmertz]

"Hardship" is not an exception to the early-distribution penalty, nor is using the money to pay funeral expenses.  The death exception applies only to a distribution from an account that was owned by the deceased.

See the following IRS web page for a list of possible exceptions:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...