Can we be charged double taking an early withdrawal from his 401K to buy a vehicle/ Form 1099-R shows a higher amount than he took out, it's double. Why?

[SweetieJean]

Did he have taxes withheld?

[Texas Roger]

Are you saying that the gross amount shown in box 1 of form 1099-R and the taxable amount shown in box 2a is more than the actual amount of the distribution that was taken out? Or are you asking about federal taxes owed on the amount of the distribution?

[VolvoGirl]

Ask the plan to explain it.  What code is in box 7?  Did he move any of it to an IRA?  

[copper6270]

Yes....the amount in those boxes is more than he took out.  Box 7 code is 1.

[TomD8 · Accepted solution]

The amount in Box 1 of the 1099-R is the gross distribution before taxes.  By IRS rule, the distribution is subject to mandatory 20% tax withholding.  A code 1 in Box 7 indicates that this was an early distribution (before age 59 1/2), which is subject to an additional 10% penalty tax.

Therefore the Box 1 amount will be greater than the amount actually received, but it shouldn't be "double."  As @VolvoGirl said, if the figures don't seem right, contact the plan administrator.