I’m helping my daughter file her taxes with TTAx. She received a 1099-R for a settlement related to her 401(k): CLARK ET AL V OASIS OUTSOURCING HOLDINGS ET AL SETTLEMENT FUND. The amount is 71.48, it’s coded as a total distribution, & the Box 7 code is 1 since she’s under 59 1/2 so will be subject to a penalty. She tried reaching the phone number on the 1099-R but couldn’t talk to anyone. I’ve tried to find the settlement document but can’t find it. My first thought is that she should have received a 1099-MISC, enter it as miscellaneous income, write an explanation letter, & have her mail the return instead of filing electronically, but don’t know if this is the right way to handle it. But I can’t understand why she should have to pay a penalty for a distribution from a lawsuit. Please help.
Probably too late now but it sounds like the funds were considered as a distribution from the 401K plan and perhaps could have been rolled back
there (or into a TIRA) thus avoiding the early withdrawal penalty.