Hello,
This is a great service! I hope this is the right way to post a question. I have a question about 401(k) early withdrawals. i know that there is an exemption to the fees for extraordinary medical expenses. Well, I incurred said medical expenses (and claimed them on my taxes) in 2009. I didn't learn that there was an exemption to the penalties for medical expenses until recently. Can i take the money out without paying the penalties now, in 2010? Should I do an amended return?
Oh, and I am no longer working for that employer so that part is not a problem.
Thank you in advance!
Sunday, April 11, 2010
Early withdrawl from 401(K)
Jen said...
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3 comments:
Dear Jen, thank you for visiting our blog.
There are usually 10 exceptions to the general rule that 401(k) or retirement account distributions are subject to early distribution penalty. One of the exceptions is that the distributions are "Made to unemployed individuals for health insurance premiums". This is not the same thing as paying for medical expenses. However, if you had circumstances where your financial situation was distressed or can prove to the IRS that your only source to obtain funds for your medical care was your 401(K), then you should amend the tax return if you have already filed it and request the IRS send you back the penalties included with the original return.
We hope that we have answered your question. Please feel free to post if you have more questions.
Best,
Web Tax Office Team
I have a question about the new Health Care Reform. I've been told that OTC drugs will no longer be covered (as of 2011) on my FSA or HSA.
That really puts me in a bind. My health insurance doesn't pay for anything that is available OTC. And with the increasing prevalence of medication being released as OTC, I'm effectively without a means of recouping a fairly significant cost - nearly $1000 a year.
Dear Cox website, we are accountants. We advice on tax and accounting related issues. Please direct your question to an expert in the area of health insurance who will be able to answer you more appropriately.
Thank you,
Web Tax Office Team
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