topic I received a 1099-R for a $10000 IRA withdrawal as I'm 54 years old. I used $3456 of that to pay for spouse life insurance. Do I still have to pay penalty? in Retirement tax questions

I received a 1099-R for a $10000 IRA withdrawal as I'm 54 years old. I used $3456 of that to pay for spouse life insurance. Do I still have to pay penalty?

susan-naida — Thu, 06 Feb 2020 17:07:13 GMT

Re: I received a 1099-R for a $10000 IRA withdrawal as I'm 54 years old. I used $3456 of that to pay for spouse life insurance. Do I still have to pay penalty?

DoninGA — Thu, 06 Feb 2020 17:14:17 GMT

Since you were not age 59 1/2 or older when you withdrew the funds from the IRA there will be a 10% early withdrawal penalty assessed on the 2019 tax return. Purchasing life insurance is not an exemption from the penalty - https://www.irs.gov/taxtopics/tc557

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

Or enter 1099-r in the Search box located in the upper right of the program screen. Click on Jump to 1099-R

Re: I received a 1099-R for a $10000 IRA withdrawal as I'm 54 years old. I used $3456 of that to pay for spouse life insurance. Do I still have to pay penalty?

dmertz — Thu, 06 Feb 2020 17:26:37 GMT

Using the money to by life insurance is not an exception to the early-distribution penalty.