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bhrajaoui
New Member

I withdrew my money from my 401K and put it all back into a traditional IRA.How can I avoid early withdrawal? Under "These Situat",I picked "Other Reas" with full amount.

 
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2 Replies

I withdrew my money from my 401K and put it all back into a traditional IRA.How can I avoid early withdrawal? Under "These Situat",I picked "Other Reas" with full amount.

Did you put it in the IRA within 60 days?  That is a Rollover.After you enter the 1099R it will ask you some follow up questions.

Pick I moved it to another retirement account even if you put it back into the same account.

Then choose - I did a combination of rolling over, converting or cashing out the money

 

Did the 401K take any tax withholding out?  If they did you needed to put the full gross amount (before tax withholding) into the IRA.   If you didn’t replace the withholding with your own money then the withholding became a taxable distribution and have the 10% Early Withdrawal Penalty.  

Check your 1040 line 5.  Line 5b should have the word Rollover by it.

DawnC
Employee Tax Expert

I withdrew my money from my 401K and put it all back into a traditional IRA.How can I avoid early withdrawal? Under "These Situat",I picked "Other Reas" with full amount.

Continue through all of the interview screens after you enter your 1099-R; there are follow-ups questions that have to be answered.   If you indicate that you rolled the money over within 60 days, the distribution won't be taxable.   But you need to go through all of questions first.   

 

  1. When asked Tell us if you moved the money through a rollover or conversion select I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days) and select Continue.
  2. On the next screen, Did you roll over all of this (Box 1) to another retirement account? answer Yes, I rolled over to an IRA or other retirement account (or returned it to the same account) and select Continue.

If taxes were withheld in box 4 of your form, they'll either be added to your refund or applied to your tax liability.

 

Exceptions to 401K Early Withdraw Penalty

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