How can I find out if I'll receive a penalty for withdrawing my 401(k) funds?

by Paul S. Carpenter, CPA | Aug 03, 2017
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I am considering withdrawing the funds in my 401(k). Prudential Retirement has informed me that I may be subject to a 10 percent early withdrawal penalty. How can I find out for sure?

Early distributions (before the age of 59 1/2) from 401(k) plans that are not rolled into another IRA or 401(k) plan are subject to current federal and state income tax, as well as an additional federal 10 percent penalty. Form 5329 instructions outline several exceptions to the penalty, but in all cases the withdrawal is subject to income taxes.

See page 4 in the Form 5329 instructions for a description of each exception to the additional 10 percent penalty.

 
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Answered by: Paul S. Carpenter, CPA, is a sole practitioner in Johnstown, Pa. 
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