I needed to take an early distribution from my 401(k), which my 401k plan allows. Since the withdrawal was a hardship 401k distribution, and it was allowed under the terms of my plan, am I exempt from the 10% early withdrawal penalty?
No. Many 401(k) plans allow you to take hardship distributions, however, the IRS doesn’t have an early withdrawal from 401k hardship exception to its early withdrawal penalty. Even if you’re allowed to take the 401(k) withdrawal under your plan, you’d still have to qualify for another exception to avoid the 10% early withdrawal penalty.
The IRS will usually audit a tax return within three years after the return was filed. Learn more about IRS audit procedures from the experts at H&R Block.
A field audit is a face-to-face examination. Read the IRS definition and get more insight from the tax experts at H&R Block.
Learn more about Letter 1616, why you received it, and how to handle a substitute for return notice with help from the tax experts at H&R Block.
Learn more about notice CP162, why you received the notice, and your options to address an IRS penalty with help from the tax experts at H&R Block.