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I entered info on a 1099R and the question asked if distribution was before 59 1/2 and it was, but system keeps indicating yes on the form. will this affect my return?

The 1099R form that I completed indicates that my husband withdrew funds prior to reaching 59 1/2.  He was already 59 1/2 when he received these funds.  They were for his father's burial.  Will it impact our return if it indicates he took money out prior to 59 1/2 years old?

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MichaelMc
New Member

I entered info on a 1099R and the question asked if distribution was before 59 1/2 and it was, but system keeps indicating yes on the form. will this affect my return?

Yes, the indicated early distribution will impact your taxes, as you will be subjected to the 10% additional tax on an early distribution. The following is taken directly from IRS Tax Topic 557 - Additional Tax on Early Distributions from Traditional and Roth IRAs:

"To discourage the use of IRAs distributions for purposes other than retirement, you'll be assessed an additional 10% tax on early distributions from traditional and Roth IRAs, unless an exception applies. Generally, early distributions are those you receive from an IRA before reaching age 59½. The additional 10% tax applies to the part of the distribution that you have to include in gross income. It's in addition to any regular income tax on that amount." (Emphasis added.) 

The list of exceptions appears in Tax Topic 557, which can be accessed through the above link. Funeral expenses are, unfortunately, not an exception.

I would ask you to please review both the Form 1099-R and your entry of that form into TurboTax, and verify whether the distribution code indicates an early withdrawal. If the form does so indicate, and you believe that is an error, please contact your plan administrator at once.

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1 Reply
MichaelMc
New Member

I entered info on a 1099R and the question asked if distribution was before 59 1/2 and it was, but system keeps indicating yes on the form. will this affect my return?

Yes, the indicated early distribution will impact your taxes, as you will be subjected to the 10% additional tax on an early distribution. The following is taken directly from IRS Tax Topic 557 - Additional Tax on Early Distributions from Traditional and Roth IRAs:

"To discourage the use of IRAs distributions for purposes other than retirement, you'll be assessed an additional 10% tax on early distributions from traditional and Roth IRAs, unless an exception applies. Generally, early distributions are those you receive from an IRA before reaching age 59½. The additional 10% tax applies to the part of the distribution that you have to include in gross income. It's in addition to any regular income tax on that amount." (Emphasis added.) 

The list of exceptions appears in Tax Topic 557, which can be accessed through the above link. Funeral expenses are, unfortunately, not an exception.

I would ask you to please review both the Form 1099-R and your entry of that form into TurboTax, and verify whether the distribution code indicates an early withdrawal. If the form does so indicate, and you believe that is an error, please contact your plan administrator at once.

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