Is there a tax break for me, if I cashed out my retirement account since I was unemployed and remained unemployed for the rest of the year?

I was in the middle of changing jobs and in good faith gave notice that I was going to leave the company. The company took it as my resignation and let me go. This happened in August and I remained unemployed the rest of the year. I took a full distribution of my IRA and Roth IRA which was under 20K to help me stay afloat until the new job began. (Which still hasn't). Is this a hardship? Are there any tax breaks or 10% penalty exception?

1371

Level 15

Jan 27, 2024 7:05:39 PM

EXCEPTIONS TO EARLY WITHDRAWAL PENALTY

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions

Expert Alumni

Jan 29, 2024 5:34:56 PM

Note that if you had to pay for medical insurance while unemployed, then the 10% penalty will not apply to that amount.

Does it look like any other exceptions might apply to you?

Why sign in to the Community?

Is there a tax break for me, if I cashed out my retirement account since I was unemployed and remained unemployed for the rest of the year?