Separation from Service

Forum|Forum|5 years ago
March 31, 2021
1 reply
10 views

I'm 59 years old and was placed on part-time variable status with my employer.

I was allowed to collect unemployment and look for work elsewhere without conflict of interest.

I took out money from my 401K and box 7 displays code 1 on my 1099R

I am now 59 1/2 and filing my return.

Does my situation qualify as Separation from Service during or after age 55?

Can I avoid the 10% tax penalty?

Best answer by MinhT1

Yes. Your early withdrawal qualifies for the Separation from service after age 55 and is exempt from the early withdrawal penalty of 10%.

Please read this TurboTax Help topic for more information.

In TurboTax, please follow these steps:

After you have entered all your forms 1099-R, on the summary page Review your 1099-R Info, click Continue
Follow the interview until you arrive at the page titled These situations may lower your tax bill
Enter the amount of the distribution in the box next to Separation From Service the Year After Age 55 and click Continue
Your early withdrawal penalty will be waived.

MinhT1Answer

Level 15

Yes. Your early withdrawal qualifies for the Separation from service after age 55 and is exempt from the early withdrawal penalty of 10%.

Please read this TurboTax Help topic for more information.

In TurboTax, please follow these steps:

After you have entered all your forms 1099-R, on the summary page Review your 1099-R Info, click Continue
Follow the interview until you arrive at the page titled These situations may lower your tax bill
Enter the amount of the distribution in the box next to Separation From Service the Year After Age 55 and click Continue
Your early withdrawal penalty will be waived.

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SJT2020Author

Level 2

Given this same situation I'm filing my State taxes for Pennsylvania. I'm asked to select a State Type code. Which State Type Code should I select?

Am I able to select "Traditional or Roth IRA: I am over 59.5"?

If not, which Code should I select?

BillM223

Level 15

Are you taking a distribution from a "Traditional or Roth IRA" or from some sort of pension? Your question suggests that you are trying to describe the type of distribution for the state of Pennsylvania to avoid PA tax - so what kind of retirement account or plan is it?

@SJT2020

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