Question

How to pay taxes on early withdrawal from a profit sharing plan?

Forum|Forum|6 years ago
August 19, 2019
1 reply
0 views

Hello, I'm having trouble finding a clear answer. I've weighed my options and decided to take withdrawal my profit share account from my previous employer. I understand I must pay taxes and penalties for both state and federal. The paper work provided has the option to withhold state taxes only. How do I pay federal taxes and penalties? I'm not sure if they need to be paid in advance. If I wait until I file my taxes at the beginning the year will there be additional fees?

Critter

Employee

Read the paperwork again carefully... if this is a taxable distribution then a 20% federal withholding is mandatory so the only option you have is on the state withholding. And if you do not have withholding and you end up owing more than $1000 on the tax return then you can and will incur a penalty.