yeah buddy, getting a 6K tax return

[KTP]

How on earth is 6k paltry?

It is only 3.5 ounces of gold or so.

[Gina23]

I never celebrate when I get anything back in taxes. I adjust my withholding. But since we're bragging... the year (2009) I got the housing tax credit I netted $9,731 buddy!

[PMMM]

25 years ago I took a paltry 10 K from a 401K and got hammered. Had to pay the 10% penalty plus the tax on the amount. It was distributed with no federal taxes taken out. the broker said or sure you can take this out it's your money. I didn't do my homework. It cost me dearly. And 25 years ago I didn't make a lot of money. I won't make that mistake again.

But every situation is different. Like others said you will not escape the 10% penalty. That will cost for sure.

Good luck I hope it all works out for you.

[greenskeeper]

I never celebrate when I get anything back in taxes. I adjust my withholding. But since we're bragging... the year (2009) I got the housing tax credit I netted $9,731 buddy!

I agree. I always try to "break even" at tax time. After all a refund is your money that you loaned to the govt for zero interest. I'd rather have that money each month instead of a "refund" each year.

[PMMM]

I agree zero is better. I got back 2700 this year. I was having an extra 100 taken out for federal taxes. I deleted that and upped my 401K contribution by 3%.

Break even is perfect in my view. I hate it when Uncle Sam uses my money for free!!

[SnoopyCool]

There are a few exemptions to that 10% tax penalty. For example - medical expenses greater than 7.5% of AGI will reduce it.

Form 5329, Line 2.

[disneysteve]

There are a few exemptions to that 10% tax penalty. For example - medical expenses greater than 7.5% of AGI will reduce it.

Form 5329, Line 2.

Can you clarify what you mean here? Medical expenses of greater than 7.5% of AGI are deductible against income regardless of whether or not you've taken an early withdrawal from a retirement plan. That deduction doesn't specifically target that 10% penalty, does it? It just reduces your tax burden overall. Anybody can take that deduction (assuming they are itemizing).

[Like2Plan]

I cut some parts out of the explanation--just to clarify--this only applies to the extra 10% penalty.

There is an explanation in the Publ 575
under
"Tax on Early Distributions
(Most distributions (both periodic and nonperiodic) from 10 of your 2011 Form 1099-R to the amounts you reported
qualified retirement plans and nonqualified annuity con- on the lines listed below, in the order shown, until you have
tracts made to you before you reach age 591/2 are subject covered the entire amount in box 10.
to an additional tax of 10%. This tax applies to the part of If you have taken a distribution from your designated
the distribution that you must include in gross income.)
...For this purpose, a qualified retirement plan is A qualified employee plan (including a qualified cash or deferred arrangement (CODA) under InternalRevenue Code section 401(k))...
Additional exceptions for qualified retirement plans
The tax does not apply to distributions that are:

From a qualified retirement plan to the extent you have deductible medical expenses (medical expenses that exceed 7.5% of your adjusted gross income), whether or not you itemize your deductions for the year,"

Publication 575 Pension and Annuity Income

[SnoopyCool]

Sorry for the late reply; I just saw this thread again today.

Whether you itemize or not, the 10% penalty can be offset by things like medical expenses that are at least 7.5% of your AGI. L2P answered that.

There are other topics that can offset that pentalty, as listed in Pub 575.

I've seen this several times the past few tax seasons, as it is a hard economy and people are hitting their retirement to help offset expenses.