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Level 1

IRA Withdrawal Penalty

Can Turbotax handle early IRA withdrawal penalty in this case? Taxpayer in the same year became age 59.5 withdraw IRA funds before age 59.5 and also other funds after age 59.5 from same IRA in same year from same IRA account. Only one Form 1099-R was received.  How does Turbotax handle this so only the part before age 59.5 is subject to early withdrawal penalty?

2 Replies
Level 20

IRA Withdrawal Penalty

What code is in box 7?
Level 20

IRA Withdrawal Penalty

If the 1099-R box 7 code indicated that it is subject to the early distribution penalty then:

The interview after the 1099-R entries screen will ask "If we can lower your tax bill".  The "Another reason" included being over 59 1/2.    Enter the portion of the distribution that was after 59 1/2 and it will not be part of the penalty.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]