Ask Experts Questions for FREE Help !
Ask
    ORLANDOV's Avatar
    ORLANDOV Posts: 1, Reputation: 1
    New Member
     
    #1

    Feb 3, 2008, 06:42 PM
    401K Early distribution 10% penalty
    From October 2006 through third week in December 2006 I was out of work with umbilical hernia on disability. My job was in an office sitting at a desk.

    I was cleared and returned to work for the final week in December 2006. Starting in January 2007 I began delivering heavy boxes of food for a food delivery business.

    The hernia surgeon did suggest in October 2006 that I stay out of jobs requiring heavy lifting. But being thick-headed I thought I would be okay. And went ahead with the new job with heavy lifting in January 2007.

    By the end of January I was suffering with various problems related to the heavy lifting... testicular hydroceles, anal fissure, and pain at the site of hernia insicion from the previous October 2006 . I had to stop doing this work in the last week of February 2007 It was my friend and my business and we were not set up for this.

    Also in January I took a early distribution from my 401k of $23,000 of which $4600 was deducted in taxes off the top.

    I am currently back behind a desk lifting nothing heavier than a pencil.

    To be 100% honest, the reason I took the early distribution was because I started to struggle with this new job not a little because of the medical problems I was experiencing.

    As I prepare my 2007 taxes I am wondering if the fact that the hernia for which I was on disability in late 2006 partly contributed to my reason for not being able to perform my job in this line of work early in early 2007 would be reason to not have to pay the 10% penalty?

    Thank you.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #2

    Feb 4, 2008, 01:30 PM
    Neative. You were working when you took the distribution, so, by definition, you were NOT disabled.

    Now, if, in 2007, you paid medical bills in excess of 7.5% of your adjusted gross income, you probably can avoid the 10% Early Withdrawal Penalty that way.
    Spiker2008's Avatar
    Spiker2008 Posts: 12, Reputation: 1
    New Member
     
    #3

    Feb 7, 2008, 02:10 AM
    Yep... I agree with Uncle Sam's nephew... you do not qualify for the 10% break... though your calculations was 20% Did you know that? If not, Uncle Sam did you through the rear twice!:eek:
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #4

    Feb 12, 2008, 01:57 PM
    Noted!

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Penalty on early 401k withdrawal [ 4 Answers ]

If I withdrew my 401k, early , What is the penalty amount in %?

Early distribution IRS penalty [ 1 Answers ]

I have an annuity under my 401K plan that I want to cash in. I know I'll have to pay taxes on the distribution. I'm wondering what the penalty will be to the IRS? I am 49 1/2 years old. Thank you

401K early withdrawal penalty [ 6 Answers ]

When my husband and I bought our new home in 2005, we both withdrew money from our 401Ks. I took $5,693 of which they took 20% in federal income tax withheld and he took $8,000 of which they took 10% in federal income tax withheld. They are now coming back to me and saying we both owe the 10%...

401k early withdrawal and 10% penalty [ 2 Answers ]

In regard to an early 401k withdrawal, can someone advise if the 10% penalty is calculated on the amount AFTER the 20% withholding, or is it on the amount of the original withdraw? (e.g. If you withdraw $10,000 from your 401k early, and the company withholds 20%=$2000; are you then required to pay...

401K Distribution penalty [ 3 Answers ]

I had no choice but to take a hardship withdrawal from my 401K after being let go by my employer. It was a difficult time also having been displaced by a house fire and having to rebuild our home and pay for a portion of our alternate living expenses not covered by the insurance company. Being a...


View more questions Search