We withdrew 401K. We now live in CA. TurboTax state product for CA says we owe the state 2.5% penalty. Do we need to pay this penalty?

[CarolC]

It depends.  If you lived in California and made an early 401k distribution you are subject to the penalty.  If you made your early distribution before moving to California then you do not have to pay the penalty.  You will need to indicate that the distribution occurred before you became a resident of California.

[lilong10]

I'm in exactly the same situation. How do I indicate the distribution occurred before I became a resident of California in TurboTax?

[elcruzador]

Same problem here. Turbotax closed my case and said this is basically not their problem. I intend to file a hard copy of my return due to this issue.

[elcruzador]

This is not TurboTax's position based on my case.