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Turbotax is saying that I will have to pay a 10% fed tax on my early withdrawal of 401K. This was already withheld by fidelity. What do I need to do?

Forum|Forum|7 years ago
June 4, 2019
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TurboTax Deluxe Online

Best answer by Coleen3

Withholding on a 1099-R works in the same way it does on your W-2. It is taken out to pay the tax as it accrues. At the end of the year, there is a reconciliation. If you paid in too much, you get a refund. If too little was withheld, you pay.

If you had and early distribution from a 401k, there is a 10% penalty for taking it. This is in addition to any tax that you have to pay on the income. The income is added to the rest of your income and taxed at the Federal rate. If they only withheld 10%, then that covers the penalty only. TurboTax is just letting you know that there is a penalty.

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Coleen3Answer

Employee

Withholding on a 1099-R works in the same way it does on your W-2. It is taken out to pay the tax as it accrues. At the end of the year, there is a reconciliation. If you paid in too much, you get a refund. If too little was withheld, you pay.

If you had and early distribution from a 401k, there is a 10% penalty for taking it. This is in addition to any tax that you have to pay on the income. The income is added to the rest of your income and taxed at the Federal rate. If they only withheld 10%, then that covers the penalty only. TurboTax is just letting you know that there is a penalty.