What Forms to File if I Cashed Out My 401k?

Form 1099-R

When you take a distribution from a 401k plan, the administrator of the plan is required to send you a completed Form 1099-R. Form 1099-R is an informational return that shows the type and amount of your pension plan distribution. Typically, the entire amount of your distribution will be taxable. As a result, you must include the information on Form 1099-R when you file your taxes. However, you only have to physically submit Form 1099-R if you actually mail in your tax return. Otherwise, you can just transfer the numbers from your 1099-R to your tax form. Even though your 401k administrator must also provide this information directly to the IRS, you still have to submit your own copy of the information.

Generally, if you receive a distribution from a 401k you must file Form 1040 when you file your taxes. Form 1040EZ is unavailable to you, although you may be able to use Form 1040A if your taxable income, including your 401k distribution, totals less than $100,000. Transfer the data from your 1099-R to line 16b of Form 1040, or line 12b of Form 1040A according to the 2010 forms.

In addition to filing your federal tax forms, you generally must pay state income tax on your 401k distribution as well. Unless you live in Alaska, Wyoming, Tennessee, New Hampshire, Texas, Washington, South Dakota, New Hampshire or Florida, you must file a state income tax return. Typically, you'll transfer the total amount of your federal adjusted gross income, which will include the amount of your 401k distribution, to your state tax return.

Whenever you file tax information, you should keep a copy for your own records. While you may never need your own copy, if you're ever audited it will be critical that you've filed a copy of your tax information in your personal records. Keep a copy of all pertinent documents, including your 1099-R, 1040 or 1040A, and the paperwork you filed to originally request your 401k distribution. You should usually keep financial records for at least six years.