#Good news! The IRS has extended the tax deadline to April 18th! As long as you submit your federal return by midnight on 4/18/2018, you won't be considered a late filer for your federal return. Direct debit tax payments that are submitted with your federal return (or on the IRS website) by 4/18 are also considered timely filed ×

How can I get out of paying additional tax on distributions? Are there exceptions?

You might be able to avoid the additional tax on retirement distributions if you need to make an early withdrawal.

Exceptions to the 10% additional tax for Qualified Plans (e.g., 401(k)) include:

  • For corrective distributions (and associated earnings) of excess contributions, excess aggregate contributions and excess deferrals, made timely
  • For a dividend pass through from an employee stock option plan
  • For payments to an alternate payee under a Qualified Domestic Relations Order
  • For employees who separates from service during or after the year they reach age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit plan)
  • For total and permanent disability of the plan owner
  • After the death of the plan owner
  • For unreimbursed medical expenses that would be allowed as an itemized deduction
  • For a series of substantially equal payments
  • Due to an IRS levy of the plan
  • For certain distributions to qualified military reservists being called to active duty
  • For permissive withdrawals from a plan with auto enrollment features
  • For in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days

Exceptions to the 10% additional tax for IRA, SEP, SIMPLE IRA, and SARSEP Plans include:

  • For the purchase of a home for qualified first-time homebuyers, up to $10,000
  • To pay for qualified higher education expenses
  • To pay health insurance premiums while unemployed
  • For total and permanent disability of the plan owner
  • After the death of the plan owner
  • For unreimbursed medical expenses that would be allowed as an itemized deduction
  • For a series of substantially equal payments
  • Due to an IRS levy of the plan
  • For certain distributions to qualified military reservists being called to active duty
  • For permissive withdrawals from a plan with auto enrollment features (only for SIMPLE IRAs, and SARSEPs)
  • For in-plan Roth rollovers or eligible distributions contributed to another retirement plan or
  • IRA within 60 days
  • Returned IRA contributions if withdrawn by extended due date of return

Still have questions? Contact member support

Continue your tax filing

Was this article helpful?