Contact UsWhat are the exceptions to penalty for early withdrawl from a 401K or IRA?
Client lost his job and decided to change career path by purchasing a business. He withdrew money from the 401K (or possibly it was an IRA) in order to fund the purchase. Is there any way to avoid the penalty for early withdrawl?
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Tax Professional Answers
Hongde Liu
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522 weeks ago
File Form 5329 with 1040. On Form 5329 Line 2, fill the amount with the exception code.
The exception code can be found on i5329, page 3-4.
Go to www.irs.gov, search 5329 in search box, you will see the Form 5329 and Instruction of 5329. You can read online or download and print out.
Paul Davidson
Just in case anyone needs to fill out an IRS form 5329, I found a blank form in this site PDFfiller. This site also has some tutorials how to fill it out and a few related tax forms that you might find useful.
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482 weeks ago