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- Returned IRA contributions if withdrawn by extended due date of return