Was fired after age 55 and then later in the year cashed out my 401k. can I put that amount in the box for the "Separation From Service the Year During or After Age 55"?

[MindyB]

Yes, it sounds like you qualify for the "Rule of 55", which is an exception to the early retirement withdrawal penalty, if you are 55 or older, and are withdrawing from your current retirement plan. Note, this only applies to the plan of the most recent employer that you separated from after 55.  If that is correct, you can claim it by entering the 1009-R information, then continuing through the interview until you get to the screen "These Situations May Lower Your Tax Bill."  Here, enter the amount you took out that met the Rule of 55.

Here is some more information from the IRS: Retirement topics - Exceptions to tax on early distributions

[dmertz]

As MindyB says, this exception only applies if the 401(k) from which you took the distribution was with the employer from which you separated from service in or after the year you reached age 55.  It does not apply to a distribution from a 401(k) at an employer from which you separated from service before that year.

Normally a plan would know your birthdate and separation date, and would use code 2 on the Form 1099-R to indicate that an exception applied.  In that case you would not have to explicitly claim the exception, TurboTax would automatically treat the distribution as exempt from the early-distribution penalty.  (Of course if the distribution was after age 59½, the Form 1099-R should have code 7 and there would be no penalty.)