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Level 1

My wife had a 401K which she withdrew in 201 and put it into a savings account. Do we have to pay a penalty?

 
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Level 20

My wife had a 401K which she withdrew in 201 and put it into a savings account. Do we have to pay a penalty?

If she was under the age to be exempt from the early withdrawal penalty when the withdrawal occurred then there will be a 10% early withdrawal penalty assessed on the federal tax return.  If the withdrawal was in 2018 then a Form 1099-R should have been received in January 2019.  The taxable amount of the withdrawal is entered on the tax return as ordinary income and taxed at your current tax rate for tax year 2018.

If the withdrawal was in 2019 then you will receive a Form 1099-R in January 2020 and report the withdrawal on your 2019 tax return in 2020.

Level 20

My wife had a 401K which she withdrew in 201 and put it into a savings account. Do we have to pay a penalty?

"she withdrew in 201"?   That must be a typo.  Did she withdraw the money from the 401k in 2018 or 2019?  How old was she when she took the money out of the 401k?  Why did she withdraw the funds?  If she was under 59 1/2 then there is a 10% early withdrawal penalty and ordinary income tax owed.  She will receive a 1099R for the distribution from the retirement account. and that 1099R must be entered on your tax return. Putting it in a savings account is irrelevant, and it does not make sense, really.  She has sixty days to roll it over into an IRA, so if it is not too late, she should consider doing that to avoid the 10% penalty and taxes.  

Level 20

My wife had a 401K which she withdrew in 201 and put it into a savings account. Do we have to pay a penalty?

Why did she take it out?  If she stopped working there she can avoid the 10% Early Withdrawal Penalty if she was 55 or older instead of needing to be 59 1/2.

 

If she had to take it out but didn't need the money (since she put it in a Savings Acct) she could roll it over to a IRA as others have said.  Is the savings account in a IRA?