turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

catsci06
New Member

Can my 401k withdrawal info be corrected?

I took a hardship withdrawal from my Roth IRA due to unemployment. This money was already taxed & since I'm in a financial hardship, my bank confirmed I would not be taxed on this money again. When I confirmed the information TurboTax had automatically pulled from my bank, the next screen kicked me out of that section & the amount I owed the Federal government jumped significantly, equaling 25% of my withdrawal. How can this be corrected?
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Reply

Can my 401k withdrawal info be corrected?

For Roth IRA withdrawals, you are always considered to withdraw contributions first, then conversions, then earnings last.  Withdrawal of contributions is never taxed.   Withdrawal of conversions has a 10% penalty if the conversion was less than 5 years ago.  Earnings are taxable plus a 10% penalty unless you are over age 59-1/2 and the Roth has been open at least 5 years. 

 

If this was a Roth IRA, what are the codes in box 7?  What is box 1, box 2a, and is box 2b "taxable amount not determined" checked or unchecked?  You may need to get your actual 1099-R from the IRA bank and make sure Turbotax imported the same information.  Assuming that box 2b is checked, that means that you have to tell Turbotax the amount of your prior contributions.    For example, if you have made $30,000 of contributions over the years, and you withdrew $10,000, then box 1 will be $10,000.  This would be non-taxable since it represents a withdrawal of contributions.  But if box 2b is checked, then you have to tell Turbotax about your prior contributions, so the program will recognize that the withdrawal represents non-taxable contributions. 

 

More info:

 

Your question is unclear.  There is no such thing as a "hardship withdrawal" from an IRA.  You can withdraw money for any reason, you just have to pay taxes (depending on certain factors, read farther). The term "hardship withdrawal" usually applies to a qualified workplace plan, like a 401k or 403b.   Did you withdraw from a qualified workplace plan?

 

You also can't take loans from an IRA, only from a workplace plan, and only so long as you are still employed so as to pay back the loan from your paycheck.  So this can't be a loan.

 

If you withdraw money from a Roth IRA, there is no special exception to the 10% penalty for early withdrawal just for being unemployed.  You can get an exception to the penalty if you use the money for COBRA insurance premiums, or to pay certain medical expenses, but not for general unemployment.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...

 

 

 

 

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies