10% Tax Pen.Execption

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  • Donanita
    Senior Member
    • Aug 2005
    • 250

    #1

    10% Tax Pen.Execption

    Client left job the first of last yr and rolled their 401K over ($25600).Then had to purchase a speech device that cost $4413 for child which was a qualified medical expense so the pulled out $4234 of the rollover to help purchase the device.They then left new job in July and moved out of state so they received $934 which was drawn out of the retirement from that job.To help on the cost of the move they them pulled the rest of the amt that had been rolled over.Question is can the $4234 quailfy for the 10% execption since it was used for medical purposes even though it is included on Sch A income is to high to use.
    Will the other withdrawals affect this.
  • Safire
    Senior Member
    • Jun 2005
    • 253

    #2
    The medical expense still has to exceed 7.5% of AGI, whether or not they itemize, in order to exclude from the penalty.

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