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    MikeyCC's Avatar
    MikeyCC Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jan 22, 2008, 03:41 PM
    401k withdrawl penalty
    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.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jan 23, 2008, 06:54 AM
    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.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #3

    Jan 23, 2008, 11:02 AM
    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.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #4

    Jan 23, 2008, 11:24 AM
    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.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #5

    Jan 23, 2008, 09:16 PM
    Scott:

    Yep, that about sums it up!

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