I removed money from my 401k one month after my son was born. The company hosting the 401k at the time did not have a specific "Qualified Birth or Adoption Distribution" option, so I just did an early distribution. Additionally, the 401k is in my name only, and my spouse is a beneficiary. Two main questions:
1. Can I still claim $5k of the distribution as "QBAD" on my tax returns even though it was just taken as an early distribution, since the company didn't have the QBAD option?
2. Can my spouse also claim $5k of the distribution separately from my (total of $10k) even though her name is not on the 401k as an owner?
1. Yes, you can use up to $5,000 to be exempt from the 10% early distribution penalty since the distribution is a qualified birth or adoption distribution.
2. No, your spouse cannot do the same since she is not the owner of the tax deferred retirement account.