Qualified 401(k) Distributions

[mblaszk]

I am retired, over 59.5, and looking at taking distributions from my 401(k) pretax fund to purchase a Flexible Annuity and a separate distribution from my after-tax Roth 401(k) (to cover tax withholding).  Does the IRS limit the amounts of these two distributions from a qualified 401(k) employer plan?  Do the taxes have to be paid in the year of the distribution(s) or can the tax burden be spread out over a period of years?  Is Turbotax Premier capable of processing this for my 2022 taxes? 

[MinhT1]

1. There is no amount limits to your distributions from your 401(k) or your Roth 401(k) accounts.

2. If you are over age 59 1/2 at the time of the distributions, there is no penalty on the distribution from your 401(k) but tax is due on your the total distribution on the year of distribution. There is no possibility to spread the taxation over several years. Distributions from for Roth 401(k) are tax free if you are older than 59 1/2 and have had the Roth account for more than five years.

3. TurboTax Premier can handle the reporting of your distributions.

[mblaszk]

Thank you for your response, it addresses my questions, but I would like to clarify a finding of mine.  In 2020 I understand an individual could take a distribution from a qualified 401(k) up to $100,000 and spread the taxes on the amount in that year and into 2021 and 2022.  Is the 3-year program no longer available? 

[MinhT1 · Accepted solution]

The possibility of spreading taxation over three years only applies to Covid-related distributions of up to $100,000 made in tax year 2020.

[Opus 17 · Accepted solution]

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@mblaszk wrote:

Thank you for your response, it addresses my questions, but I would like to clarify a finding of mine.  In 2020 I understand an individual could take a distribution from a qualified 401(k) up to $100,000 and spread the taxes on the amount in that year and into 2021 and 2022.  Is the 3-year program no longer available? 

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Only for 2020, and only if you could honestly certify that the withdrawal was to cover expenses related to a COVID hardship.