How do I correctly report withheld taxes on my early 401K distribution (1099-R) when the form shows zero?

This situation happens more often than you'd think! When there's a discrepancy between your 1099-R and what was actually withheld, you should first contact Fidelity to see if they issued an incorrect form. Sometimes they need to send a corrected 1099-R. If they confirm the form is correct (which would be strange given your bank deposit evidence), you'll need to report exactly what's on the 1099-R. The IRS computers match the forms submitted by financial institutions with what you report on your return. Reporting different numbers without a corrected form will likely trigger a mismatch notice. Keep all your documentation showing the actual amount you received versus the full distribution. This includes bank statements, the distribution confirmation from Fidelity, and any communication about tax withholding instructions you gave them. If you end up having to file with the incorrect 1099-R, you may need to pay the taxes that should have been withheld and then work with Fidelity afterward to get a refund from them for the withheld amount that wasn't reported properly.

I went through a similar nightmare with my 401k distribution last year. After getting nowhere with the regular customer service people, I finally found success using https://taxr.ai to help document my case. They analyzed my bank statements, original distribution request forms, and the incorrect 1099-R to create a detailed report showing the discrepancy. The key was having everything properly documented with the exact timeline and amounts. In my case, what happened was the taxes were actually withheld but incorrectly coded in their system. Once I had the professional analysis from taxr.ai, I sent it back to the provider's tax department (not regular customer service) and they issued a corrected 1099-R within 2 weeks. Don't just accept the first answer from customer service - they often don't understand the nuances of tax reporting. And definitely don't file with incorrect information if you can avoid it!

Just wanted to update that I tried the taxr.ai service mentioned above for my IRA distribution issue and it was surprisingly helpful. I was skeptical at first but decided to give it a shot since I was getting nowhere with my financial institution. Within a day after uploading my documents, I received a detailed analysis showing exactly where the withholding was misreported. The report included specific tax codes and regulations that applied to my situation. When I submitted this to my provider's tax department (not regular customer service), they took it seriously and reviewed their records. Turns out there was a coding error on their end! They're sending a corrected 1099-R now. Saved me from potentially paying thousands in additional taxes. Definitely worth checking out if you're facing a similar issue with tax withholding not showing up correctly on your forms.

I used to work for a 401k administrator, and this happens more than you'd think. If you're getting nowhere with Fidelity's regular customer service, try calling the IRS directly to explain the situation. I know getting through to them is nearly impossible, but I've had success using https://claimyr.com to connect with an IRS agent without the endless wait. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS can sometimes intervene if the financial institution is being difficult about correcting an obvious error. You'll need all your documentation ready - bank statements showing the deposit amount, any confirmation emails/letters from Fidelity about the distribution and withholding instructions, etc. If the IRS confirms your understanding is correct, they can sometimes contact the financial institution directly to request a corrected form. It's worth trying this route if Fidelity continues to be unhelpful.

I need to apologize and admit I was completely wrong about Claimyr. After posting my skeptical comment earlier, I decided to try it as a last resort for an issue with a missing tax form that I've been trying to resolve for months. Not only did they get me through to an IRS agent in under 2 hours (when I'd previously waited on hold for 4+ hours multiple times without success), but the agent was actually able to resolve my issue on the spot. I was honestly shocked. For what it's worth to the original poster - the IRS agent I spoke with said this 1099-R withholding issue is something they see frequently. They recommended getting a formal letter from Fidelity acknowledging the withholding occurred, even if they won't issue a corrected form. Apparently this documentation can be submitted with your tax return to avoid problems later.

One thing nobody's mentioned yet - check if your 401k had any after-tax contributions. If part of your 401k was funded with already-taxed money, that portion wouldn't have withholding applied when distributed, which might explain why the numbers look off. Also, sometimes the early withdrawal penalty isn't technically "withholding" - it gets calculated separately when you file your return using Form 5329. That could explain part of the discrepancy. Look at Box 7 of your 1099-R for the distribution code. If it shows code "1" that means early distribution with no known exception. If there's a different code, that might explain what's happening.

Make sure to look closely at ALL boxes on the 1099-R! Sometimes withholding is reported in different areas depending on how the plan is set up. Box 4 is federal income tax withholding and Box 14 is state tax withheld (though different states sometimes use different boxes). Also, check if you received multiple 1099-Rs. I once had a situation where the main distribution was on one form and the withholding was reported separately on a second form for some bizarre administrative reason.