Form 5329-T for Early Distribution Due to Eligible Expense (FL Hurricane)

[kpolo]

I thought the full amount of the early distribution from the retirement account (from employer) would not penalized if the amount was taken out as a qualified disaster (in this case FL Hurricane Milton). The amount is $3000.

However during the review I am receiving the following "Check This Entry".

Form 3529-T: Line 2 worksheet line W column A (eligible emergency expenses - non SIMPLE) should not be greater than $1000.

Line 2 w/s line W column A $3000.

It the amount limited to $1000?

[dmertz · Accepted solution]

If you were in a federally-declared disaster area, the distribution must be entered as a disaster distribution, not an emergency distribution.  TurboTax reports disaster distributions on Form 8915-F.

If you were not in a federally-declared disaster area, you can claim an emergency-distribution penalty exception on only up to $1,000 and the rest would be subject to the early-distribution penalty.