topic Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k) in Retirement tax questions

Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

flyinhigh — Tue, 24 Feb 2026 07:54:02 GMT

I left the company in 2021, at age 57, and I took a withdrawal from my 401(k) in 2022. I imported the information from Fidelity (the 401(k) management company).

I cannot see how this withdrawal is treated in TurboTax to confirm that it is NOT subject to the 10% Additional Tax penalty. I looked at form 5329, but didn't see anything about this withdrawal on that form.

How can I confirm that this withdrawal (before age 59 1/2) is treated properly in TurboTax and not subject to the 10% Additional Tax penalty?

(and... thank you for your help!)

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

VolvoGirl — Thu, 05 Oct 2023 20:04:31 GMT

After you enter the 1099R and keep going it should ask you if you have any exceptions. What code is in box 7 on 1099R? The 10% Early Withdrawal Penalty is on Schedule 2 line 8 which goes to 1040 line 23 so look on line 23. I'll have to look but there should be a way to visit the penalty section like after you are done with deductions it will ask.

I wouldn't import the 1099R. It might come in wrong. I manually enter mine.

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

DoninGA — Thu, 05 Oct 2023 20:13:12 GMT

On the Form 1099-R you received for the withdrawal the code in box 7 of the form should be a 2 indicating —Early distribution, exception applies (under age 59½).

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

flyinhigh — Thu, 05 Oct 2023 21:33:24 GMT

There *IS* a 2 in Box 7 of the Form 1099-R. Thanks!

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

flyinhigh — Fri, 06 Oct 2023 14:32:29 GMT

There is a 2 in Box 7 of the Form 1099-R. Thank you for the details about where to find Early Withdrawal Penalty (on Schedule 2).

I can't figure out how to get to a place, in TT, where I can enter the 1099-R. When I search for 1099-r, the 'Jump to link' doesn't show up in the search results and when I click on the 1099-R button, it takes me to an answer outside of TT (and I also can't figure out how to give feedback to Intuit about that problem).

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

DoninGA — Thu, 05 Oct 2023 21:51:36 GMT

@flyinhigh

To enter, edit or delete a form 1099-R -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Retirement Plans and Social Security
On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

Re: Rule of 55 exception to the 10% Additional Tax penalty for early withdrawals from 401(k)

flyinhigh — Sat, 07 Oct 2023 00:38:51 GMT

Thank you for all the helpful replies!

I was able to follow the help in navigating to the 1099-R in TurboTax, too. 🙂