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[USA] [401K] I was in a settlement for a class action lawsuit involving a 401k. I just received a 1099r. Box 7 has code "7"; I am under the age to withdraw without penalty. Will i receive a penalty? (lemmy.world)
submitted 10 months ago by acetanilide@lemmy.world to c/personalfinance@lemmy.ml
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Sorry for long title:

  • USA
  • in a state with no state income tax
  • my former employer (international corporation) messed up 401ks, resulting in class action lawsuit
  • settlement gave claimants <$20 each
  • just received a 1099r for this amount
  • box 7 = "7", which means normal distribution per IRS
  • I am under 59.5

I don't understand the table on the IRS website. Just wondering if there will be a penalty for this settlement "distribution" or if it is waived since it was part of a lawsuit. I usually do my taxes by myself so I don't have anyone to ask.

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[-] PrinceWith999Enemies@lemmy.world 8 points 10 months ago

Is it $20 or $20k?

I’m pretty sure the penalty on withdrawal is a percentage of the amount withdrawn, so if you’re using tax prep software I’d just enter it as written and see how much it changes your taxes. It’s probably not even going to be a rounding error compared to your overall tax bill.

[-] acetanilide@lemmy.world 4 points 10 months ago

Makes sense.

It's $20 (well less than that actually lol. Might go to McDonald's)

[-] dohpaz42@lemmy.world 11 points 10 months ago

They screw up your 401k, probably to the tune of millions, and you get McD’s out of it. God bless America. 🫡

this post was submitted on 05 Feb 2024
29 points (96.8% liked)

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