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Level 2

Question

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

AmyC

Level 15

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.

A code 7 in box 7 means no penalty and qualify for the NY exemption. You have code 1. Which means the 5329 on the federal and if any of the exceptions can be met, you can claim it. Super high medical bills for instance can be used even if that wasn't the original purpose.

As for NY, we don't know your age. The code 1 tells me you should be under 59 1/2 and not qualify. If you are over 59 1/2, you qualify.

Reference: New York Pension Exclusion.

If you have already filed your tax returns, wait until they are accepted and the dust settles, then you can amend.

Follow these steps:

First - Save a copy of your original file by downloading or printing a copy for your records.

Second - You will need to file an amended return with federal and amend your state as well. See How do I amend my federal tax return for this year? and I need to amend my state return.

Third - Correct the income.

Fourth - Be sure to enter the amount of refund already received as you go through the program. See it on line 18 of the 1040x.

Fifth - E-file federal and state, if possible. See Can I e-file my amended state return?

If you must mail your state, be sure to sign and date. Mail with tracking and no signature required.

Sixth - make any payments due online. For the federal, Payments for your state check here.

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401k withdrawal

14 replies

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