How to report withdrawing from a Retirement plan early?

Question

Hello there,

Last year, after leaving a job, I discovered that I had been signed up and contributing to a retirement plan without my knowledge. I withdrew all the funds from the account. I remember at the time it was heavily taxed (I am under 59 1/2 years old), but I think I still need to report this on my taxes. How do I do this? I am currently attempting to file my taxes but I cannot find a category that mentions this as income. I understand that I should file a 5239 Form but I can't find an option for this. Please help! I am in Washington state.

kiarab · Answer

Hello,

I’m glad you were able to find the 1099-R. Anytime you take a distribution from your retirement plans (such as a 401k or IRA), you should get a 1099-R reporting it.

When you say it was taxed heavily, that was probably just the taxes withheld to cover the amount of taxes owed on the income. You need to report it all on your individual income tax return. Then, you will know if you need to pay additional taxes on it or if you will get a refund of some of the taxes you paid.

You can, indeed, file this on our software. We support all sorts of tax forms and a 1099-R is a relatively common one.

One thing to keep in mind is that since you withdrew it early and didn’t roll it over to another retirement account within 60 days, you may be subject to the early withdrawal penalty of 10%. That will be figured out on your tax return, but I am going to include a link that goes over some exceptions to the rule just in case.

civic98 · Answer

It was a 401k, and I was able to find a 1099R Form issued to me. Can I still file this through the regular tax software? Are there any special steps I need to take? Thank you for the response! I am young and new to filing taxes and I appreciate the help.

JMSSGV · Answer

You probably need to report the distribution on your tax return, but whether and how much of it is taxable depends on other factors. What type of account was it? Did you receive a Form 1099R from the issuer showing the amount you withdrew?

When you report it, it goes under RETIREMENT INCOME (Form 1099R)