I withdrew my 401k earlier this yr to pay off all my debt since I was in between jobs. I had two withdrawals on which, instead of paying 20%, I voluntarily paid 30%. Will this make much of a difference when I have to do my taxes for this yr regarding the penalty I pay? I am single, and income of around $40,000/yr gross.

Does your $40K "gross" income include the withdrawal from your 401(k)? If so, and your total income is $40K, then the 30% you had withheld is probably more than you needed. $40K income puts you in the 15% bracket (assuming you are married filing jointly), plus 10% penalty gets you to 25% total. So you may get a bit of a refund. But don't forget if you live in state with income tax you will have to pay them as well.

ebaines:

He stated that he was single, so his marginal tax rate is 25%, so I suspect that he may have to pay something come tax time.

Thoma09:

A breakout of how much of the $40K is 401K distribution and how much is salary will help us give you an estimate on your tax liability.

ebaines:

He stated that he was single, so his marginal tax rate is 25%, so I suspect that he may have to pay something come tax time.

Thoma09:

A breakout of how much of the $40K is 401K distribution and how much is salary will help us give you an estimate on your tax liability.

OK, add in the distribution and my gross would be around $58k

ebaines:

He stated that he was single...




Yep - missed that - thanks!

Thoma09:

Your federal tax liability is about $8,650 and the 10% Early Withdrawal Penalty is $4,000, for a total of $12,650.