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SHANNONSTEVEN
Feb 4, 2008, 03:15 PM
my husband took out his 401k early because he no longer works there. we are trying to understand the rules for taxes. it seems that is you took out the early due to no longer employed, the 10% tax penalty is waved. there were taxes withheld on the 1099-r. is this correct or not
shannon
ScottGem
Feb 4, 2008, 03:55 PM
Who told you the penalty is waived? That's just not so. The amount of the distribution, as listed on the 1099, is added to your income for the year. the amount withheld is added to your salary withholding. Then you figure your tax liability and add the 10% penalty.
AtlantaTaxExpert
Feb 6, 2008, 12:39 PM
Agreed.