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Old 02-16-2015, 10:28 AM
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401k Early Distribution A Couple Months After Moving

On 4/1/14, I moved from Iowa to Virginia. In August, I took an early total distribution from a 401k to help pay for our first home.

When doing my taxes with an online service, it's trying to have me pay tax on the withdrawal in both Iowa and Virginia. It seems like I should only be paying taxes on the withdrawal in Virginia. Is my thinking correct?

Thanks



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Old 02-16-2015, 05:20 PM
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Quote:
Originally Posted by actuarius View Post
On 4/1/14, I moved from Iowa to Virginia. In August, I took an early total distribution from a 401k to help pay for our first home.

When doing my taxes with an online service, it's trying to have me pay tax on the withdrawal in both Iowa and Virginia. It seems like I should only be paying taxes on the withdrawal in Virginia. Is my thinking correct?

Thanks
basically, Hardship withdrawals are permitted from 401(k) plans. They are still subject to applicable income taxes and a 10% early withdrawal penalty if you are younger than 59½;
you need to file taxes for both Virginia and Iowa as a part year resident of Virginia and Iowa. So even if you withdrew from 401K in Virginia as a part year resident of Virginia, you still owe tax to Iowa on earnings that earned from Jan 1 March 31 2014 as a part year resident of Iowa. Iowa assesses a certain percent income tax on earnings. Contact the plan administrator at your previous employer in Iowa to find out the actual modalities of your cash out (early withdrawal), and an accounting of the taxes and the penalties they charged you.



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