Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

avoid penalty on a 401K withdrawal when lost job

My client took money from 401K after she lost her job and couldn't find another. Can she avoid the penalty?  She has 3 kids and only made $13000 from her job.  Took $28000 from the 401 K.  I was thinking a hardship penalty but I can find anywhere to put that on the 1099-R worksheet or the 5329.  She did not tell them it was a hardship when she took it out. 

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

1 Best Answer

Accepted Solutions
Just-Lisa-Now-
Level 15
Level 15

You can use Hardship to get them to cash it out to you, it doesnt excuse the penalty though.

Retirement accounts are an expensive place to get money when youre not retirement age.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

View solution in original post

7 Comments 7
Accountant-Man
Level 13

How old is she?

** I'm still a champion... of the world! Even without The Lounge.
0 Cheers
RollTide68
Level 8
Just-Lisa-Now-
Level 15
Level 15

You can use Hardship to get them to cash it out to you, it doesnt excuse the penalty though.

Retirement accounts are an expensive place to get money when youre not retirement age.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

40

0 Cheers

Yes I agree but I told them I would check to see if there was anyway to avoid it.  😞

Skylane
Level 11
Level 11

@utah-arizona-taxlady  I frequently use posts here to substantiate bad news that i have to give my clients. Sooner or later they learn to talk to their preparers before they make an out of the ordinary financial move during the year.

If at first you don’t succeed…..find a workaround

Good idea Skylane! 

0 Cheers