Question

If withdraw from 401K and do the request on 2020, but funds are received on 2021, is it a taxable income on 2020 or 2021?

Forum|Forum|4 years ago
December 14, 2021
2 replies
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TurboTax Online

Employee

Depends when the 401K sends it. Did you get a 1099R last January for it? Maybe you will get the 1099R next month January for 2021.

M

metcalfe-lilliewAuthor

I haven't filed it yet because I do not want to jump to another tax bracket. So no, I haven't received a 1099R. Basically we lost a source of income, so if the taxable income from the 401K withdrawal applies to 2021, I would jump tax bracket, which I want to avoid.

But, If I submit the withdrawal now and I get the funds in 2022, would that be a taxable income for 2022, even though I submitted for the withdrawal of funds in 2021? TIA!

Critter-3

Again it depends on when the actual distribution happens not when the paperwork was started so ask the 401K plan administrator for an exact answer. Also you know you can take part in 2021 and part in 2022 if the plan allows. Or roll the entire amount to an IRA then take well timed distributions as needed.

macuser_22

Employee

The date that the financial institution made the funds available to you, not necessary the date you receive them.

Ask the financial institution.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

macuser_22

Employee

In addition: Many (most) financial institutions have rules that they have 2-3 business days to post a transaction. So if the distribution request was submitted on Dec, 29 2020 or later it most likely would post Jan 4, 2021 making it a 2021 distribution. The fact that you have still not received a 2020 1099-R would seem to support that.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**