401k early withdrawl penalty

[Anjali_S]

Hello,

The exceptions are listed here. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

The one you may be asking about is that, for certain employer-sponsored plans, you can withdraw without the penalty if you are over 55 AND separated from service with the company.  (The normal age to be exempt from the early withdrawal penalty is 59-1/2.)

When you withdraw from a retirement plan, the plan administrator sends you a 1099-R income statement by January 31 of the next year.  That income is reported on your tax return.  There are questions in Turbotax that will allow you to indicate if you qualify for an exemption and prepare the correct forms.

All withdrawals from tax-advantaged plans are subject to regular income tax.  The exemption only applies to the additional 10% penalty for early withdrawals. 

Let me know if this solves your query.

Thanks.