401k withdrawal and gross income

Forum|Forum|1 year ago
June 18, 2024
2 replies
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I understand that any withdrawals from 401k are considered income. I'm curious about its relation to my gross income. For example, if I withdraw $20,000 from my 401k account, should I simply add it to my gross income when I file taxes next year? I'm a self-employed contractor receiving 1099-NEC. So I'm curious.

Best answer by dmertz

If you take a distribution from your 401(k) in 2024, you'll receive a 2024 Form 1099-R that you'll need to enter into 2024 TurboTax. If you have no after-tax funds in the 401(k), the Form 1099-R will show that the entire distribution is taxable and will add to your AGI by being included on Form 1040 line 5b.

(If you do have after-tax funds in the 401(k), the distribution will be a proportionate mix of after-tax funds and taxable pre-tax funds. Only the taxable amount adds to your AGI. After-tax funds would generally be those that you explicitly contributed as after-tax funds or resulted from repayment of a defaulted 401(k) loan.)

DoninGA

Employee

Withdrawals from a 401(k) account are entered on your tax return as ordinary income.

You will receive a Form 1099-R in January of the year after the withdrawal. The Form 1099-R is reported on your federal tax return.

dmertzAnswer

Employee

cspyonAuthor

For example, If I take $3000 monthly, I receive about $2100 after federal and state tax withholding. So, if I start receiving it from July to Dec. this year, the total $18,000 (3000 x 6 months) would be added to my AGI when I file the tax returns next year, right?