Ask Experts Questions for FREE Help !
Ask
    ceboley24's Avatar
    ceboley24 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 7, 2007, 02:41 PM
    401k taxes and penalty
    Hi, can someone please tell me how many % is taxable in a 401k withdrawal and is this on top of the 10% penalty? If you use the withdrawal to buy a house is there a tax break?? :confused: Iam 32 years old and the amount is 31,600 and when do I pay the penalty and the tax? Any other alternative with less tax?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Mar 8, 2007, 03:49 PM
    There is NO tax break for withdrawing from a 401K to buy a house.

    There is a tax break for withdrawing up to $10,000 from a traditional IRA to buy a house for the first time.

    You may want to consider borrowing from your 401K for the house. Most companies permit this, though it is discouraged.

    Depending on your income bracket, you could pay up to 35% in taxs on top of the 10% early withdrawal penalty.

    An alternative is to roll over $10,000 from the 401K to a rollover IRA, then do the withdrawal from the IRA. If you have a spouse, he can do the same thing.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

401K withdrawal taxes and penalty figures [ 11 Answers ]

I can tell I'm going to make about $32000 this year... Back in Feb. our company did away with its (Cash Balance) plan of retirement, in which we had several choices to make on it. Mine was to take it in a lump sum, which was not the smartest, but what's done is done. The amount was $12,295 and the...

401K Penalty [ 12 Answers ]

Hello, I am wondering if you can "guesstimate" what my loss would be if I chose to take out a lump sum withdrawal on my 401K. First some background. I am not close to being 59 1/2 years old (or my spouse). I live in a state with no state income tax. I have 3 children under the age of 18 and a...

401K Penalty 10% [ 5 Answers ]

Hi, I lost my job of 30 years this year due to disability. I have been awarded Social Security Disability. Approved in Feb 06, first payment was August 06. I had 2 withdrawals from my 401K. The first had a 10% penalty, the 2nd did not because of the disability. My question is: Is the...

401k penalty [ 2 Answers ]

First time homebuying classifies for the non pentalty right? How do they tax, before you receive it or add it to your yearly income come tax time.

401k penalty payment [ 5 Answers ]

Hello, This past year I liquidated my 401k and am not eligible for a waiver for the 10% penalty. I used turbo tax to file my taxes and while turbo tax did put me through a questionnaire that resulted in it saying I owed a penalty, it never subtracted the penalty or told me how to go about paying...

View more questions Search