Traditional TSP hardship withdrawal

[fMcWilliams]

I received a distribution for $6128 in 2024 and paid 10% to Federal Taxes at the time of the distribution. When I'm entering my 1099-R with code 1 it's saying I owe $1930 which is 31.5% of the distribution. Is this right?

[SabrinaD2]

When you receive a 1099-R with code 1, it means you took an early distribution from your retirement account. This distribution is subject to both regular income tax and a 10% early withdrawal penalty.

Here's the breakdown:

1. Regular Income Tax: The $6128 distribution is added to your taxable income and taxed at your marginal tax rate.
2. Early Withdrawal Penalty: An additional 10% penalty on the distribution amount.

If your marginal tax rate is around 22%, the total tax and penalty would be approximately 32% (22% income tax + 10% penalty), which matches the $1930 you're seeing.

For more details, you can check out an early distribution calculator here.