I took a 401K distribution in May of 2017 for my daughters wedding. This distribution was Federally taxed at 20%. I subsequently retired in that same calendar year in October of 2017 at the age of 59.
My question surrounds the 1099R that I received which had a Distribution Code of a 1 (Meaning the 10% penalty applies). Is there any way around this penalty since I retired within that same calendar year....Any assistance would be greatly appreciated.
Unfortunately, timing is everything. Since you are over 55, you would have been okay if you had waited until after you stopped working for your employer to take the distribution. For a discussion of this and other exceptions to the early distribution penalty, please see Topic Number 558 - Additional Tax on Early Distributions from Retirement Plans Other Than IRAs.