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401(k) birth/adoption distribution: $5,000 cap, $500 10% avoided

Qualified birth or adoption distribution (QBAD): up to $5,000 per child, no 10% early tax.

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Amount treated as QBAD

$5,000.00

10% early tax avoided

$500.00

Over the $5,000 cap

$0.00

IRC 72(t)(2)(H): $5,000 per child, not COLA-indexed. Still ordinary income. Does not model recontribution. Educational estimate, not tax advice.

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Qualified birth/adoption distribution

IRC 72(t)(2)(H) lets you take up to $5,000 per child from a 401(k) without the 10% early-distribution tax. The cap is not COLA-indexed.

QBAD

QBAD = min(requested, $5,000 − already taken for this child)

Example: $5,000 requested, nothing taken → $5,000 QBAD and $500 of 10% tax avoided. Ordinary income still applies.

Related: paycheck take-home, 401(k) remaining room.