Depends. If you separated from service and at least 55, you would not be subject to the 10% early withdrawal penalty. If you just cashed it out and are still working for the same company, then you will owe the 10% early withdrawal unless you are 59 1/2 or meet one of the exclusion criteria. Also, if you were affected by the Pandemic and needed to withdraw from your retirement, there are exclusions for the 10% penalty and an option to spread the income over 3 years.
The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020 taxes.
If you are under 59 1/2 and don't meet one of the exclusion criteria then you will have to pay an additional 10% early withdrawal tax. This tax will show on Schedule 2, line 6.
Also, the distribution will be included in your taxable income and show on line 5 of Form 1040.
Please follow these steps to enter your 1099-R from the distribution:
- Login to your TurboTax Account
- Click on the Search box on the top and type “1099-R”
- Click on “Jump to 1099-R” enter your 1099-R and answer all the questions
TurboTax will calculate the correct tax.
To preview your return:
- Click on "Tax Tools" in the left menu
- Click "Tools"
- Click "View Tax Summary" in the Tool Center window
- Click on "Preview my 1040" on the left
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