Check out some similar questions!

goldensydney · Oct 14, 2008, 05:10 PM

My husbnd and I are retired and make 58K ayear. If I cash in 16K from my 401K plan how much federal income tax and Minnesota income tax do I have them hold out to pay the taxes?

ebaines · Oct 15, 2008, 05:45 AM

When you make the withdrawal the administartor should withhold 20% of it for federal taxes, and nothing for state income taxes. The 20% is probably more than you will actually owe, as a married couple in the $74K income range is in the 15% bracket. As for MN, their tax rate for someone with your income is between 7.05% and 7.85%, so you should plan on owing them about $1200 on this withdrawal. You should look into whether you should file an estimated income tax form with MN by January so as to avoid the possibility of owing interest due to underpayment of taxes durng the course of the year.

gknutson · Sep 8, 2012, 03:29 PM

Thanks - if someone wants to pull out MN taxes early on their 401K distribution, which form should we complete? I know that the 5329 will suppliment when completing taxes in the new year but what about now? Principal sent me a W-4P form and I'm not certain that it's the correct form.

Thanks again!

ebaines · Sep 10, 2012, 06:49 AM

Form 5329 is to calculate additional taxes that are due on your 401(k) distribution above and beyond regular income tax, if any (for example for early withdrawal penalty). It is NOT a form for specifying additional withholding from the distribution for state income tax purposes. W-4P is the form to use if you want more than 20% withheld for federal taxes, but again doesn't do anything for MN state tax withhlding.

I suggest you talk to the plan administrator and see if they can withhold MN taxes for you. Or else you can simply file an estimated tax form with MN and send them the money yourself.