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New Member
posted Jul 9, 2020 3:55:46 PM

Early withdrawl 401k wife 55. IRS no 10% penalty. But Turbo Tax not showing as option at beginning. Will that be an option if I continue entering info?

0 2 458
2 Replies
Expert Alumni
Jul 9, 2020 5:42:48 PM

There are certain distribution codes that will automatically not apply the 10% early distribution penalty.  If the distribution code on your Form 1099-R is not one of those, then after you have entered the Form 1099-R you will have an opportunity to enter information about an exception to the penalty.  The question will come up after all other follow-up questions with regard to the distribution have been answered.  

 

 

@Hoppe3799

Level 15
Jul 10, 2020 6:39:48 AM

The age-55 exception applies only if the distribution is from the 401(k) of an employer from which your wife separated from service in or after the year she reached age 55.  If she qualified, the Form 1099-R would normally have code 2 in box 7 instead of code 1.  If it has code 1, she can still claim the exception by entering the amount into the box on TurboTax's These Situations May Lower Your Tax Bill page.  Be sure to click the Continue button on the Your 1099-R Entries page or go to Other Tax Situations -> Additional Tax Payments -> Extra tax on early retirement withdrawals.

 

Is the distribution really from a 401(k) and the IRA/SEP/SIMPLE box is not marked on the Form 1099-R provided by the payer?  The age-55 exception does not apply to distributions from an IRA (IRA/SEP/SIMPLE box marked).