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meagang78
New Member

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

 
5 Replies
Bsch4477
Level 15

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

If the dental expenses would normally be a medical expense (as opposed to cosmetic) you can take an amount greater than 7.5% of your AGI without a penalty. You still have to pay income tax on the amount withdrawn. 

dmertz
Level 15

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

More accurately, the amount that is exempt from penalty is an amount distributed up to the amount of non-reimbursed medical expenses that exceed 7.5% of AGI.  This is the amount of medical expenses that would appear on Schedule A line 4 if you were to itemize deductions (without any requirement that you actually itemize).
amydavidnatalie
Level 1

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

To add to this question, would the money be considered income, even if I did use the exemption for medical expense?

VolvoGirl
Level 15

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

Yes it will add to your income and be taxable.  The exemption is only for the extra 10% Early Withdrawal Penalty if you are under 59 1/2.

amydavidnatalie
Level 1

I would like to cash out my 401k for dental expenses. Do I have to pay the penalty?

thanks!

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