[dupont22]

My wife cashed in her 401k this year,we understood the federal tax and penalty complications and prepared for this,however our tax preparer told us we needed to prove the amount withdrawn was already taxed by the state(which it is always)the only way to do this is by providing w2's from the 90s.Here are the problems with this,employer no longer exists,company that took over 401k only has balance info not witholding,previous company won't cooperate.and to top it all off IRS only can go back to 1999.How is this fair that I have a "double"state taxation because we have no way to provide the witholding info from such a long time ago.I even contacted my state rep who put us in touch with a state revenue person only to have them tell us they don't have that info either! help

[ebaines]

Please clarify - what state do you live in? If PA, my understanding is that her withdrawal from the 401(k) is not taxed by PA, as long as she is at least 59-1/2. Or have you moved to another state?

[dupont22]

This was an early withdrawal,the state says we owe taxes on the money earned not the money contributed to the plan,however,without proof the state assume's the 17,000 came from no contributions from us therfore we owe taxes on the 17,000 amount rather than the 2,000 dollars since we believe her contributions alone totaled 15,000.Again employer stubs or w2's are impossible,IRS only goes back ten years,company that tookover plan only has total that came over to them not a breakdown and the old institution for the 401k won't give us anything because they say we are not authorized since we haven't had anything with them for 10 years?

[ebaines]

I take it that you neglected to save any of the quarterly or annual acount statements form the "old institution," which would show pre-tax versus after-tax contributions that your wife made - that would be the best evidence. Absent any good records, I suggest that in your response to the state you include in your letter your best estimates of the amounts withheld each year. Also, please answer the question I asked previously - what state did you live in when your wife was working? I assume that you currently live in PA - is that correct?