topic Erroneous Penaly for Early Withdrawal in Retirement tax questions

Erroneous Penaly for Early Withdrawal

7578761155 — Sat, 01 Mar 2025 07:14:36 GMT

I am 72 years old. During 2024 I took distributions from several retirement funds. TurboTax is charging me a 10% penalty for early withdrawal. This penalty is bogus because these are NOT early withdrawals. How do I fix this in TurboTax?

Re: Erroneous Penaly for Early Withdrawal

AnnetteB6 — Sat, 01 Mar 2025 15:05:10 GMT

Double-check that your date of birth was entered accurately in the Personal Info section of your return.

Re: Erroneous Penaly for Early Withdrawal

7578761155 — Sat, 01 Mar 2025 20:10:43 GMT

Hi AnnetteB6,

Yes, I have triple-checked that my birthday (09/09/1952) has been entered correctly. I have looked everywhere I can to check birthday date but I can't find any error. Are there any other suggestions you, or anyone else, can give me to get this fixed?

Re: Erroneous Penaly for Early Withdrawal

NCperson — Sat, 01 Mar 2025 20:21:34 GMT

please post the specific form, line number and the amount in question. it is possible what you are seeing is other than what you are describing.

Re: Erroneous Penaly for Early Withdrawal

DianeW777 — Sat, 01 Mar 2025 20:23:59 GMT

Yes, when you finish your 1099-R entries you should see a question about whether this is an RMD. Be sure to select 'The entire distribution was an RMD' after each 1099-R entered (see below).

Re: Erroneous Penaly for Early Withdrawal

7578761155 — Sat, 01 Mar 2025 20:45:28 GMT

Answer to first message:

Form 5329, Part 1, Line A, $35,369. These distributions were coded 7 on 1099-R. I'm 72 yrs old and these are not early distributions and have done these distributions for the last 5 years without any issues.

Answer to second message:

At the end of the 1099-R entries I wasn't asked anything about RMDs. That's probably because I'm only 72 and not required to take RMDs yet. These were normal distributions coded 7.

Re: Erroneous Penaly for Early Withdrawal

NCperson — Sat, 01 Mar 2025 21:12:53 GMT

@7578761155 - you may be misinterpreting. Code 7 is a normal distribution and as long as your date of birth is correct, there is no penalty.

Look at Form 1040, line 23 - is there anything there?

Also, look at Schedule 2 - the early distribution penalty would be in Part II, line 8 of this form. What is there?

Re: Erroneous Penaly for Early Withdrawal

7578761155 — Mon, 03 Mar 2025 12:35:59 GMT

Good Morning. This issue has been totally my fault. I accidentally ticked a wrong box on one retirement distribution and it caused all my distributions to be marked as early distros. Correcting that tick fixed all the distros and everything is accurate now. Thanks for all the assistance.