When Is A 401(k) Distribution Not Subject To The 10% Penalty?
There are only a couple of situations where the IRS will waive the 10% early withdrawal penalty.
- Your unreimbursed medical costs exceed 7.5% of your income.
- There is a Qualified domestic Relations Order (QDRO) from the courts that mandate funds from your account go to a former spouse, child, or dependent.
- You’ve separated from service and were at least 55 years of age when you did so.
- You have elected a Section 72(t) distribution.
- You are totally disabled.
- You have died and your beneficiary gets the money.
You could also consider taking a loan or hardship withdrawal from your plan.
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