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    schuttpelz's Avatar
    schuttpelz Posts: 2, Reputation: 1
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    #1

    Feb 20, 2006, 04:59 PM
    Taxes on 401k cashout
    The amount is $36,000.00. The holding company withheld $7,200.00 for the IRS.

    Is the entire amount of $36,000.00 still a taxable amount?
    Does the 10% early withdrawal penalty come of the taxable amount, and now the taxable amount is $32,400.00?

    Is the taxable amount the total after the 20% withheld by the holding company sent to the IRS, $28,800.00?

    Please clarify.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Feb 20, 2006, 07:27 PM
    Schuttpelz:

    The entire $36,00 will be taxed as ordinary income.

    Further, a 10% early withdrawal tax will be assessed, and that 10% cannot be mitigated by deductions, credits or exemptions. This means that you will pay at least $3,600 in taxes.
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