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dkgcbdk2
New Member

Pension withdrawal 401-b at age 64

My father is was 64 in 2023, he had a pension plan 401-b with about $10,661 that was just sitting since 2000. In 2023 he decided to withdraw the money 1099-R box 7 = 1 and IRA/SEP/SIMPLE is not checked. Federal tax withheld = $2,132. He got reminder of the money $8k or so. Filing this in TurboTax as 1099-B, the program told us that because he withdraw money early, he needs to pay additional $1000 in taxes:

 

Based on the 1099-R Box 7 code that you entered, it looks like you may need to pay extra taxes on this distribution.
This most commonly happens when you take money out before you reach retirement age (or before you're supposed to). The extra tax encourages you to keep your retirement money for retirement instead of withdrawing it early.
 
Is this early retirement penalty because he was 64 instead of 65?
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1 Best answer

Accepted Solutions

Pension withdrawal 401-b at age 64

The plan administrator used the wrong code in box 7, it should have been a 7 for a normal distribution.  There would only be a 10% early withdrawal penalty if he was under the age of 59 1/2 when the funds were withdrawn. 

By using a code of 1 in box 7 that indicates - Early distribution, no known exception (in most cases, under age
59½).

 

You need to contact the plan administrator or the Payer and get a corrected Form 1099-R.

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3 Replies

Pension withdrawal 401-b at age 64

The plan administrator used the wrong code in box 7, it should have been a 7 for a normal distribution.  There would only be a 10% early withdrawal penalty if he was under the age of 59 1/2 when the funds were withdrawn. 

By using a code of 1 in box 7 that indicates - Early distribution, no known exception (in most cases, under age
59½).

 

You need to contact the plan administrator or the Payer and get a corrected Form 1099-R.

dkgcbdk2
New Member

Pension withdrawal 401-b at age 64

Thank you!

dmertz
Level 15

Pension withdrawal 401-b at age 64

You can also just claim a code-12 an exception on line 2 of Form 5329 for an incorrect early distribution.

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