Solved: Early Distribution from Retirement Account
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
CMA1965
Returning Member

Early Distribution from Retirement Account

I received an early distribution from a 457 retirement account.  I used the money for medical expenses, so Turbo Tax said I didn't owe any taxes on the distribution.  However, as soon as I entered the info from my 1099-R form, the amount of federal tax I owed increased by $2700.  Why is this?

1 Best answer

Accepted Solutions
MaryK1101
Expert Alumni

Early Distribution from Retirement Account

You must still pay the income tax, but the medical expenses exempts you from paying the additional taxes for early withdrawal (10%).

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
MaryK1101
Expert Alumni

Early Distribution from Retirement Account

You must still pay the income tax, but the medical expenses exempts you from paying the additional taxes for early withdrawal (10%).

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

dmertz
Level 15

Early Distribution from Retirement Account

Your Form 1099-R presumably has code 2 in box 7 to indicate that this distribution from the 457(b) plans is not subject to any early-distribution penalty and that's what TurboTax was referring to as an "additional tax."  Except for distributions of amounts attributable to funds rolled into a 457(b) plan from a non-457(b) retirement account, distributions from a 457(b) are not subject to early-distribution penalties no matter what you do with the money.

Dynamic AdsDynamic Ads
v
Privacy Settings