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What 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?
Penalty 401(k)
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Tax Professional Answers

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Hongde Liu
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. 
Leave a Comment 231 weeks ago

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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.
Reply 191 weeks ago

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