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Cash distribution form my former job 401k Roth IRA. I see that early withdraw is taxed and withheld automatic. Do I need to declare or fill out form next year?

With the withholding happening automatic, Do I need to fill out the form? Or can I cash out without worrying out following up with tax forms?
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2 Replies
BillM223
Employee Tax Expert

Cash distribution form my former job 401k Roth IRA. I see that early withdraw is taxed and withheld automatic. Do I need to declare or fill out form next year?

You will receive a 1099-R early next year, and you absolutely have to enter this in your 2024 tax return (assuming you did this after Jan 1, 2024).

 

And note that the penalty and the withholding don't necessarily cover the tax due from this event. I encourage to create a test return and enter the probable data for 2024 to see how it affects your tax bill. 

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Cash distribution form my former job 401k Roth IRA. I see that early withdraw is taxed and withheld automatic. Do I need to declare or fill out form next year?

Did you take out from a 401K or from a IRA?  They are different things.   A job would be a 401k.  Then was it a regular 401k or a ROTH 401k?  If you were over 55 when you left the employer you may not have to pay the 10% early withdrawal penalty.  

 

You didn’t actually pay the tax or the 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You had taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.


It has to break out and show the 10% penalty separately on your return (schedule 2 line 8 which goes to 1040 line 23). Then you get credit for all the withholding taken out on 1040 line 25b.

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