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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13113
Experience:  15years with H & R Block. Divisional leader, Instructor
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Hello, I withdrew from a 401k ira in 2011. I reported the

Customer Question

I withdrew from a 401k ira in 2011. I reported the income and paid income tax. I stated on 1040 (or at least I thought I did) that the money was used for higher education for my 3 sons. Now the IRS has sent me a letter stating I owe the 10% penalty with another late penalty. Is there anything I can do to avoid the 10% penalty.
Submitted: 3 years ago.
Category: Tax
Expert:  Robin D. replied 3 years ago.

Robin D :

Hello and thank you for using Just Answer,
The Form 5329 would have been used to claim relief from the 10% penalty on an early withdraw. Look to your copies of the 2010 return and see if you have that form.
If you do then send a copy to the IRS (call the number on the notice and ask if you can fax).

You want to check your 1099R for that year also. If you meet one of the exceptions to the tax, and your Form 1099-R does not have a distribution code "2", "3", or "4" in the box labeled "distribution code(s)," or if the code shown is incorrect, you must file Form 5329 to claim the exception.

Robin D :

Just as a reminder, qualified higher education expenses are tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution. This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in the student aid programs administered by the U.S. Department of Education. It includes virtually all accredited, public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.

Robin D :

Let me know if I need to clarify any of the above for you before you rate.

Customer: replied 3 years ago.


I just checked form 5329 and the two forms have zero for every entry.

Expert:  Robin D. replied 3 years ago.
That is most likely why the IRS did not overlook the 10%. If you truly paid for qualified education expenses then you would need to properly complete the 5329. The 5329 should have the amount that is not subject and the code for the exception you are claiming. Line 1 would have the total form the 1099R and Line 2 would have the amount that is allowed for the exception to the 10%.
I would suggest you contact a local tax professional if you completed the tax return yourself originally.
Expert:  Robin D. replied 3 years ago.
Wanted to touch base with you and make sure all worked out.

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