RE: Periodic Payments_Quetsion on 2022 tax form: “Did you receive payments from this retirement acct. …”?

[sugersam5]

Hi_

Quick background:

-I took an early retirement from my job (am 63) right before CV19 (not knowing that was coming either, other reasons) and then CV19 started and as of April 2020 I needed to take money from my 401K savings to survive (still using the 401K source). I started taking a set amount/month as of that month and since I have changed the monthly $$s a few times, per my needs.

The struggle:

Every time I get to this *question, while doing my taxes on TurTx, which I have been using for the past 12/13 years or longer, I feel I am not understanding it or checked off per my take of its explanation box as my answer (No).

I hope it is not an item that impacts (ed) my tax form(s), which I am not sure if it does, but it is a new question, as of 2020 tax year, due to taking monthly withdrawals from my 401K and being a retiree.

On the form on TurTx:

--------------------------------

*Q:

“Did you receive payments from this retirement acct. on a regular basis, such as monthly, quarterly or annually?

The Help (Learn More) Box:

Periodic Payments:

>Funds that you receive at regular intervals (weekly, monthly, quarterly, annually) over a predetermined period of time, for example, 15 years, or for life.

>Equal periodic payments are annual withdrawals that you make from a pension plan or 401(k) plan. The amount you withdraw is calculated so that the funds last throughout your expected lifetime.

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-Receiving the monthly over a predetermined period of time…, that was not so much my aim at the time_I just started with an amount that I needed to survive and adjusted as I went on since that April (Re: item 1 on the Help Box)

Or

I did not calculate as such that the acct lasts me for my expected lifetime or am taking fund on annual basis (Re: item 2 on the Help Box)

Perhaps I am looking into this too deep or by saying NO I feel (felt) that answer applies.

Any assistance to understand and apply my best answer is appreciated_

Thank you much.

M_

>>If the answer s/d be a YES, do I have to adjust last 2 years’ returns? I hope not!

[JulieS · Accepted solution]

No, you do not have to change your answers, or amend your tax returns. 

The purpose of this question is to see if you qualify for the Equal Periodic Payment exception to the early withdrawal penalty. Since you are over 59-1/2, this doesn't apply to you and the way you answer the question does not change your tax return. 

[sugersam5]

Hi Miss Julie,

Thank you for the reply and answering the question- It confirms the first answer I got by Miss Amy C last night.

I will apply your (bot of you) explanation to that Q.

Be well!

M_

[dmertz]

This question being asked by TurboTax has nothing to do with early-distribution penalties.  It's asking if the distribution was received as an annuity.  In this case, answer No because, while you are receiving regular amounts at regular intervals, you are not receiving them as an annuity if you are permitted to change the distribution amount or frequency at any time.