Early Distribution Penalty 401K

[BoPeep2022]

My husband was laid off from his job of almost 15 years on 11/4/20, along with many others at the company due to Covid. We received a severance package, and he registered for unemployment, but we never received any. My husband has been going back to school to learn HVAC, and we needed money to live on, and for him to pay for school. We waited until our 401K reached $140,000, so we could take out $40,000, and received $32,000 after taxes on 6/25/21. Is there a penalty exception for our circumstances for early withdrawal?

[RobertB4444]

Yes, unless your husband is over 55 (or 50 if he was a public service employee) there is a 10% penalty on early withdrawal of your retirement income even if he was laid off.  There is also an exception on a withdrawal to cover higher education expenses although the HVAC training may not qualify.

[BoPeep2022]

My husband is 53 years old, he worked at an oil refinery in the trucking department.  Where do I go to find more exceptions?  What I see on Turbo Tax doesn't fit our circumstances for early withdrawal.  I'm on the page where it says "Let's see if we can reduce your early withdrawal penalty."

[JulieS]

Based on what you have said here, I don't think there is an exception that applies to your situation.

Click here to see the complete list of exceptions to the early withdrawal penalty.

Please note that you need to look in the 401K column to see if the exception applies to 401K distributions.