I cashed out my 401k and have high student load debt. I have read that is an approved reason and should not have to pay the 10 percent penalty. My question is what do I have to provide for my taxes that shows this student load debt.

If you are under 59-1/2 years of age you do indeed owe the 10% penalty for early withdrawal from your 401(k), as well as regular income taxes on it. Your plan administrator should send you a 1099-R showing the amount of withdrawal and taxes already withheld. You report the distribution on line 16 of form 1040, and the 10% penalty owed on line 60.

If this had been a withdrawal from an IRA then you may not owe the 10% penalty for early withdrawal, but since this was from a 401(k) plan you do - sorry.

Even if you had withdrawal from Trad IRA, this is subject to 10% early withdrawal penalty. Student loan debit is not excluded from penalty. The withdrawal for your qualified higher education expenses are excluded.

So, you cashed out an investment that was growing tax free to pay off a debt that had a low interest rate and a tax deduction. In addition you are paying a penalty for doing so.

Scott:

Yep, that about sums it up!

Not one of Mikey's signing moments, for sure!