401-K Distribution

[Duane Anderson]

Taxpayer took a distribution from Company 401K plan. 1099R was issued with distribution code 1. The funds were withdrawn during the covid crisis. Is there an exception somewhere which I cannot find on my software on the amount not being taxable and not subject to the early withdrawal penalty? Taxpayer says Company indicated the withdrawal as not being taxable ? Thanks Duane Anderson

[BP.]

Hi~ Check TTB 13-24 for details on taxability & early withdrawal penalty, and Form 8915E for reporting the COVID-19 distribution.

[Lee Welter]

Loans from 401(k) had a three-year repayment schedule with the Covid law. No 2020 RMDs required. Code one is early distribution with NO known exception. Both taxable and subject to penalty. Look for other exceptions, like higher ed costs or maybe medical.