401k distributed early but penalties were taken when it was distributed? Do I still claim on taxes?

Question

I had an early distribution of my 401k. When it was distributed, the company said that I could elect to have all the taxes and penalties taken out at the time of the distribution instead of waiting until tax time. I had them do this, but now I'm wondering what do I put on my taxes? Do I claim it still even though I was already penalized? Is there a special form?

Answer 1

They will report the amount taken out as Federal withholding. You will need to report the amount on your return and may need to file form 5329. You should check to see if you qualify for one of the exceptions to the 10% penalty. First time homebuyer, medical, job loss (There are a couple but I think I got them all). You can find the exclusions in the instructions to form 5329 or ask the person who maintains your 401(k) at work, they will be well versed on the issue.

Answer 2

TMA spelled it out perfectly. Only thing I worry about is that you used the phrase "early distribution". If you took a hardship withdrawal then they likely took the amount of the 10% excise tax out at that time, but if you took a full distribution then they didn't account for that amount. You should be getting your 1099-R shortly. Simply divide the amount withheld by the taxable amount distributed. If that number is higher than 30% then you're ok. File your taxes as you would normally do. The distribution amount goes on line 16a and the taxable amount goes on line 16b. Then you add the amount withheld to the amounts withheld shown on your w-2's (they all go together on same line) and put that on line 64. You may qualify for an exemption of the 10% so check the Form 5329, but it's not likely. But the 10% excise tax goes on line 60. You can use the Form 5329 to calculate it but only include the Form with your filing if you qualify for one of those exceptions.

Hope this and all other info helps.

Answer 3

you will receive a 1099-R showing the amount of your distribution, and any taxes withheld on the amount. you will need to attach a copy of the 1099 to your tax return. when preparing your tax return, have it calculate the 10% penalty on your distribution. you do claim it, but you have nothing to worry about as you already paid in the taxes/penalties by having it withheld.

if you file your own return, the software will walk you through it. if youre having them done by a professional, they will already know what to do.

Answer 4

You will receive a statement from the company that handled your 401K distribution much like a W2 and claim it on your taxes just the same.

Answer 5

You'll list the withdrawal on your tax return, and also show the total amount withheld for taxes. You won't get double-taxed, since you will get credit for all the money that was withheld. There's not a special form, it just goes on your 1040.