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January 19, 2021
Question

I get paid 47,000/year. I took an early withdrawal on my 401k of 55,000. I paid the 20% tax plus 5% to federal and a total of 10% to state. Will I be subjected to pay additional taxes?

  • January 19, 2021
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1 reply

January 19, 2021

That depends.  There are a number of exclusions to the additional 10% penalty on early withdrawals from a retirement account. You may qualify for one of them.  Additionally, if the withdrawal from your retirement plan was related to Covid-19 pandemic issues, you would have the option to defer the tax over the next 3 years.  TurboTax will help you through those options to insure you get all the tax breaks available to you.  But at first blush, it looks like you had plenty of tax withheld.  There are a number of variables that could effect your 2020 net tax amount.  I will include a link to the TurboTax TaxCaster that will help you with a 2020 tax estimate before entering all your tax information.

 

 

Click HERE for answers from the IRS.gov website about Covid-19 relief for retirement plan distributions.

 

Click HERE for a list of exceptions to the 10% early withdrawal penalty for  401K distributions.

 

Click HERE to link to the TurboTax TaxCaster.