Asking for someone else.

If, during 2020, one did an early withdrawal funds from a 401(k) and/or IRA, and one elected for extra withholding (above its final tax rate), when would that get returned? Is it handled with the tax return?

Let's say the overpayment was in excess of the full cost of the taxes on it plus the full cost of the penalty on it. Would all of the overpayment be returned, or does the case need special handling outside of filing taxes?

1 Answer 1


This would all get properly accounted for and rectified when you file your taxes. The financial institution that provides your 401(k) will provide you with a form 1099-R for the distribution, which will list the amount distributed (taxable income) and the amount withheld for tax. When you file, you will include this income along with the rest of your taxable income, and the tax withheld along with any other tax withheld. If your total tax withheld over the course of the year exceeds your tax liability (based in part on your total income), you will receive a refund.


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