I withdrew $8000 from a retirement fund. My net after they held for penalty and taxes was $6000. I used the entire $6000 to fund further education in 2007 to qualify for and to obtain a new job in the same field. The education was required to be completed last year for the new employer to hire me this year. I see that there is some relief if it is used for higher education such as college. Do I qualify to be exempt from the 10% penalty and am only accountable to pay taxes on the withdrawal? If so, what form do I use? My gross income is $60,000.

Thank you for any help.

Quote:

---

Originally Posted by fanjet

I withdrew $8000 from a retirement fund. My net after they held for penalty and taxes was $6000. I used the entire $6000 to fund further education in 2007 to qualify for and to obtain a new job in the same field. The education was required to be completed last year for the new employer to hire me this year. I see that there is some relief if it is used for higher education such as college. Do I qualify to be exempt from the 10% penalty and am only accountable to pay taxes on the withdrawal? If so, what form do I use? My gross income is $60,000.

Thank you for any help.

---

Was this withdrawal from an IRA, or from your 401(k) plan? It makes a difference - if from a 401(k) then you are stuck having to pay the 10% penalty (I am assuming you are under 55 years of age). If from an IRA, then you can avoid the 10% penalty.

Your plan adminisrator should have sent you a form 1099-R showing the amount of the withdrawal and taxes withheld. You report the withdrawal on tour 1040 line 16 (Pensions and Annuities), and the 10% penalty on line 60 (Additional tax on IRAs, other quaified plans, etc). You can attach form 5329 if you think you do not owe the penalty.