If you took a distribution from your 401(k) or another qualified retirement plan (excluding IRAs) before you turned 59 1/2, you'll pay a 10% early withdrawal penalty, with a few exceptions:
- Death, or total and permanent disability
- Qualified Domestic Relations Order
- Series of substantially equal periodic payments based on life expectancy
- Dividend pass through from an ESOP
- IRS levy
- Unreimbursed medical expenses that are more than a certain amount of your adjusted gross income
- Certain distributions to qualified military reservists called to active duty
- Separation from Service if age requirement is met
- In-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days
- Distributions to qualified public safety employees after separation from service on or after December 30, 2022
- Distributions to terminally ill individuals certified by a physician after 12/29/2022
- Qualified disaster recovery distributions
Effective in 2024, the following exceptions will apply:
- Victims of domestic abuse that occurred within the previous 12 months by a spouse or domestic partner
- Distributions using the financial emergency exception are limited to one per calendar year and a maximum amount of $1,000
- Certain distributions on eligible work plans for short-term emergency needs not to exceed $2,500
Once you enter the distribution information from your 1099-R form, we'll help you check for any exceptions that could reduce the tax.
