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.
Do you have to pay a penalty if you file your taxes late? Look at fees and exemptions and get tax answers at H&R Block.
Can you can an exemption for early distribution from a 401k? Knowing the answer can make a big difference. Get tax answers from H&R Block.
What should you do if you don't agree with an IRS adjustment letter? Find out more and get tax answers at H&R Block.
If a business doesn't pay taxes, what will the IRS do? Learn about penalties for businesses and get tax answers at H&R Block.