My 1099-R form shows 20% was withheld for taxes yet I'm being taxed another 10% of the gross distribution now as I attempt to file for 2016. I don't get this, any help?

[cmgfilms1]

Long story short: I purchased a home and my lender was atrocious at communicating dates and details. With 24 hours to spare, I was informed they needed my down (which was supposed to come from a loan I was going to get against my former employer's 401K), so I was forced to close the account in order to meet the deadline. (My investment company otherwise needed 15 days to process.)

[Coleen3 · Accepted solution]

When you take a premature distribution form an IRA or pension plan, you pay both tax and a penalty of 10%.The 20% already paid covers your 10% penalty and whatever portion of your tax that falls into the 10% bracket of taxable income. Rarely does this cover all the taxes since you probably  are being taxed at a higher rate than 10%. There are possible exemptions to the penalty in the link below. You may possibly be able to take advantage of one of them.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

[cmgfilms1]

Thank you, Coleen! This was very helpful and I appreciate your time in answering.