401K Withdrawal

Forum|Forum|6 years ago
June 27, 2019
1 reply
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I am wanting to withdraw my 401k. I understand there is a 20% tax plus 10% penalty tax. I have added additional taxes to be withheld; is there additional taxes and how can I calculate how much additional taxes I would owe?

macuser_22

Employee

If you are under age 59 1/2 then there is a 10% penalty. The 20% is the mandatory amount of withholding but you can request more to be withheld. The 20% is withholding, not the tax which can be more or less depending on your tax bracket and other income.

The distribution is taxes as ordinary income taxed at whatever your margional tax rate would be so add another 10% to that for close to the actual tax.

(Note, that if you are still working for the company, many 401(k) plans do not allow distributions prior to retirement or might only allow hardship distributions ans some do not even allow that.)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**