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What are the exceptions to the penalty for an early withdrawal from my 401(k)?

SOLVEDby TurboTax1593Updated 1 week ago

If you took a distribution from your 401(k) or another qualified retirement plan (excluding IRAs) before you turned 59 1/2, you'll pay a 10% early withdrawal penalty, with a few exceptions:

  • Death, or total and permanent disability
  • Qualified Domestic Relations Order
  • Series of substantially equal periodic payments based on life expectancy
  • Dividend pass through from an ESOP
  • IRS levy
  • Unreimbursed medical expenses that are more than a certain amount of your adjusted gross income
  • Certain distributions to qualified military reservists called to active duty
  • Separation from Service if age requirement is met
  • In-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days
  • Distributions to qualified public safety employees after separation from service on or after December 30, 2022
  • Distributions to terminally ill individuals certified by a physician after 12/29/2022
  • Qualified disaster recovery distributions

Effective in 2024, the following exceptions will apply:

  • Victims of domestic abuse that occurred within the previous 12 months by a spouse or domestic partner
  • Distributions using the financial emergency exception are limited to one per calendar year and a maximum amount of $1,000
  • Certain distributions on eligible work plans for short-term emergency needs not to exceed $2,500

Once you enter the distribution information from your 1099-R form, we'll help you check for any exceptions that could reduce the tax.

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