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  • Jan 24, 2006, 10:19 AM
    apendrag0n
    401K Question
    I left the employ of a company that I had a 401K through and cashed it out. They withheld 25% for taxes... How/where do I claim this on my 1040 this year?
  • Jan 24, 2006, 05:34 PM
    AtlantaTaxExpert
    Apendrag0n:

    Your former employer will send you (and the IRS) a Form 1099-R to document your early cashout. You will owe normal income taxes (both federal and state) plus a 10% earluy withdrawal penalty which cannot be mitigated.

    You must file Form 1040. You show the distribution amount on Line 16a and 16b and the 10% penalty on Line 60. If you have mitigating circumstances for cashing in the 401K, you may get the 10% penalty waived by filing Form 5329.

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