You'll need to sign in or create an account to connect with an expert.
Unfortunately, you are focused on only one aspect of the tax consequences of an early distribution from a qualified retirement plan.
Any amount distributed prior to age 59 1/2 is subject to the 10% penalty tax, which you referred to in your question. In your case, based on the $2,600 penalty tax, your actual distribution would have been $26,000. I believe you may have overlooked the fact that, if a plan has been funded with pre-tax contributions, subsequent distributions are taxed as ordinary income. In your case, the distribution resulted in an additional $26,000 being taxed as ordinary income in 2018 plus the 10% penalty for early distribution.
Unfortunately, you are focused on only one aspect of the tax consequences of an early distribution from a qualified retirement plan.
Any amount distributed prior to age 59 1/2 is subject to the 10% penalty tax, which you referred to in your question. In your case, based on the $2,600 penalty tax, your actual distribution would have been $26,000. I believe you may have overlooked the fact that, if a plan has been funded with pre-tax contributions, subsequent distributions are taxed as ordinary income. In your case, the distribution resulted in an additional $26,000 being taxed as ordinary income in 2018 plus the 10% penalty for early distribution.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
danieldykim
Level 2
momolatte
New Member
vmdibello-gmail-
New Member
ScubaGT63
Level 3
zachziervogel
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.