401k Hardship Withdraw

[adidas33999]

Hi and thanks in advance for your help. I took $20,000 out of my 401k in 2025 via the hardship withdraw. I know I owe an additional 10% penalty on this amount. With the new law allowing $1,000 withdraw without penalty, do I only owe the penalty on the remaining $19,000?

[Opus 17]

Yes, you can claim an exception to the penalty for up to $1000 for a personal emergency expense.  After entering the 1099-R for the withdrawal, Turbotax will ask about situations that might qualify for a reduced penalty and that is one of the choices.

Note that you can't claim the personal emergency exception more than once per 3 years, unless you either (a) repay the emergency distribution, or (b) make new contributions into the 401k that are more than the amount of the previous emergency withdrawal. 

[adidas33999]

Thank you!