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copper6270
New Member

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?

 
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Accepted Solutions
TomD8
Level 15

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?

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.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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5 Replies
SweetieJean
Level 15

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?

Did he have taxes withheld?
Texas Roger
Level 15

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?

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
Level 15

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?

Ask the plan to explain it.  What code is in box 7?  Did he move any of it to an IRA?  
copper6270
New Member

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?

Yes....the amount in those boxes is more than he took out.  Box 7 code is 1.
TomD8
Level 15

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?

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.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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