Taxes on 401k cashout

Question

Feb 20, 2006, 02:59 PM

schuttpelz

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Join Date: Feb 2006

Posts: 2

Taxes on 401k cashout

The amount is $36,000.00. The holding company witheld $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 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.

Answers

Feb 20, 2006, 05:27 PM	#2

AtlantaTaxExpert Tax Expert Join Date: Feb 2005 Location: Atlanta, Georgia Posts: 9,873	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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