401k

Forum|Forum|5 years ago
August 6, 2020
1 reply
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Making a withdrawal from the 401k as a down payment will I be taxed on the amount I withdraw

ItsDeductible Online

VolvoGirl

Employee

Yes. A 401K withdrawal is 100% taxable unless it's in a ROTH 401K. And there is a 10% Early Withdrawal Penalty if you are under 59 1/2. But the penalty might be suspended for 2020 due to the Covid-19. Can you take a loan from it instead of a withdrawal? You don't report loans.

Mht1939Author

My husband is 62, has a rollover 401k, will make a withdrawal of 60,000 in California. Does he take taxes right off the top or when we file next year

VolvoGirl

Employee

They will take out tax withholding on the withdrawal. That's just like withholding from your paychecks. You will get a 1099R at the end of the year to enter into your tax return with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due.