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.
To learn more about early withdrawal penalty exceptions, see the instructions for Form 5329 at www.irs.gov.
Related Resources
The IRS has disallowed one or more of the credits claimed on your tax return. Learn about your options to address IRS notice CP79 from the experts at H&R Block.
The discrepancy between your name and your Taxpayer Identification Number has been corrected. Learn more from the tax experts at H&R Block.
The IRS made a change to the Making Work Pay and/or Government Retiree Credit on your tax return. Learn more about IRS notice CP12M from H&R Block.
If you receive a Form W-2G for gambling winnings, you must report the full amount of income shown on the W-2G on your tax return. Learn more from H&R Block.
