Does anyone know what i can mark if i took money out of my 401k early so that i can recieve a tax break?

[DavidD66]

If you took an early (e.g.before age 59 1/2, or) distribution from your 401(k) in 2021, you won't receive a "tax break".  The amount you withdrew will be taxed as ordinary income, and you will have to pay an excise tax (penalty) of 10% of the amount withdrawn.  Note, an employee separates from service during or after the year the employee reaches age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit plan) they will not be subject to the 10% additional tax.

If the distribution was taken in 2020 and was a coronavirus-related distribution it is not subject to the 10% additional tax.  Moreover, there was an option to spread the taxable amount of the distribution ratably over a 3-year period that begins in the year of the distribution.  Or you could include the entire amount in income in the year of the distribution. This election can’t be made or changed after the timely filing of the individual’s federal income tax return (including extensions) for the year of the distribution.

[Edited 01/25/2022 | 3:25 PM EST]

[Opus 17]

The age threshold to withdraw from a 401(k), if you have separated from service with that employer, is 55, not 59-1/2.

You always pay regular income tax on money that you withdraw from a pretax 401(k). You will pay a penalty if you are under age 55, unless you qualify for one of the penalty exceptions.  The exceptions are listed here, and it is also important to understand that the exceptions are different for a 401(k) and an IRA, and some of the exceptions available for an IRA are not available for 401(k).

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