topic Can we take 401K withdrawal and give as gift to adult child without being taxed? in Retirement tax questions

Can we take 401K withdrawal and give as gift to adult child without being taxed?

lifeiskids — Mon, 09 Mar 2026 05:58:08 GMT

We want to gift money ($20K) from our 401K to our adult child but do not want to raise our taxable income for 2022.

Re: Can we take 401K withdrawal and give as gift to adult child without being taxed?

DoninGA — Wed, 16 Feb 2022 17:34:36 GMT

A distribution from a 401(k) retirement account is a taxable event. The taxable amount of the distribution is entered on your tax return as ordinary income and taxed at your current tax return.

What you do with funds received is not relevant unless it is an early distribution subject to a 10% early distribution penalty then the penalty may be waived but not the taxable amount of the distribution.

IRS Tax Topic website for the penalty exclusion from an account not an IRA - https://www.irs.gov/taxtopics/tc558

Re: Can we take 401K withdrawal and give as gift to adult child without being taxed?

xmasbaby0 — Wed, 16 Feb 2022 17:08:35 GMT

Sorry---you will be taxed on the withdrawal. Gifts to your children are not deductible. If you are younger than 59 1/2 there will also be a 10% early withdrawal penalty.

GIFTS

Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return. Money that you gave as a gift to someone else is not deductible for your taxes.

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

https://www.forbes.com/sites/ashleaebeling/2017/10/19/irs-announces-2018-estate-and-gift-tax-limits-11-2-million-per-couple/#3226e75d4a4b