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    Johnnybeer's Avatar
    Johnnybeer Posts: 1, Reputation: 1
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    #1

    Apr 18, 2011, 10:50 AM
    Taxes - 401k early withdraw penalty - unemployed premiums
    Thanks for reading...

    I am unemployed and using a portion of a 401k early withdraw to pay for health insurance? What are the limits involved? I took the withdraw in 2010 but I have been paying out of pocket for health care coverage since July of 2009 up until today.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Apr 18, 2011, 01:56 PM

    What limits are you referring to? You have to pay income tax on the distribution from your 401(k) plus the 10% early withdrawal penalty. The 10% penalty may be reduced IF the money is used for medical purposes AND your medical expenses exceed 7.5% of your adjusted gross income. If this is the case you will have to file form 5329 to justify not paying the penalty.
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