401k withdrawal

Forum|Forum|1 year ago
March 21, 2025
14 replies
72 views

When completing my tax forms i noticed that the amt of my non penalty 401k wd income carried over to the state form and plugged in a 20k subtraction under pension and annuities(pension and annuities income exclusions for local , state federal pensions) I don't believe I am eligible for this subtraction as this is not a pension (it is a 401k savings acct). I tried 2 different tax programs with the same affect. While it looks great as I would get alot more in a return, I dont wish to be penalized for the 1k difference if it is wrong . This.is for Nys

401K

DaveF1006

Level 15

To clarify, what state?

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Laf923 Author

Level 2

New york

Laf923 Author

Level 2

Here's more info on Box 7 Codes on Form 1099-R.

A Code 1 in Box 7 will require Form 5329, which calculates the 10% penalty for early withdrawal, with no exception. TurboTax will fill out the form for you, after asking if you qualify for any exceptions. Here's more info on Penalty Exception for Non-IRA's.

New York automatically excludes 20K from a retirement distribution (anything on a 1099-R), if you're over 59-1/2 and received 'periodic payments' from this account. If this was a one-time distribution, go back to your Federal entry and step through the interview until you get the question about 'periodic payments'.

Here's more info the New York Pension Exclusion.

@Laf923

I had 2 different calls from turbo tax representatives who advised that a 5329 for is not required as long as the the exception code is correct in box 7. In the case of the form with code 1- the penalty is correct and should be assessed which is was when it was filed. There are no exceptions to be had as it was a 401k the issuer closed out and mailed a check and the recipient was under 59 1/2 .

As for the 20k state exemption, I was also advised that this deduction was correct as It was taken after 59 1/2. Now of course I am very concerned I was provided the wrong information and my taxes were filed incorrectly.

I took performed two withdrawals for the year, ine in december 2023(however company cutoff for withdrawals meant this would be counted in 2024) and another in September 2024.