Is a distribution from 401k penalty free if we had a baby this year?

Forum|Forum|1 year ago
February 4, 2025
1 reply
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Distribution was under $5k

ThomasM125

Yes, you can exclude up to $5,000 of an early distribution from a 401-K from penalty if used for care of a new born.

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tylergunderson45Author

Ok that is what I thought but when I entered the 1099-R it doesn’t have a birth exception within any of the questions it asks after. So it decreased my return by more than 10%. Does it ask more questions later?

AnnetteB6

The categories for an exception to the early distribution penalty will be shown on a follow-up screen as you are leaving the section where Form 1099-R information is entered.

The screen will be titled 'These Situations May Lower Your Tax Bill'. Look for a box labeled Qualified Birth or Adoption Distributions.

@tylergunderson45

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