Question

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?

Answer

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 Topics

Related Resources

Form 1041 Schedule D

Do you need to report capital gains or losses associated with an estate? Learn more about Form 1041 Schedule D with help from the tax pros at H&R Block.

What Happens After You Report Identity Theft to the IRS

Did someone file a fraudulent return in your name? Get the facts about reporting tax identity theft to the IRS and what you can expect after you report it.

IRS Letter 226J – Proposed Employer Shared Responsibility Payment

The IRS think you owe an Employer Shared Responsibility Payment. Learn more about IRS letter 226J from the tax experts at H&R Block.