Log in

View Full Version : Type and amount of taxes


ks9441
Jun 16, 2008, 12:35 PM
I took out a 401k loan for $20,000 and made payments by payroll deduction.
I left my employer with a balance of $15,874 to pay on the loan. Fidelity has informed me I can not make payments on my loan since I left my employer. Can anyone tell me what kind of taxes am I looking at? I need to start saving asap so I will not be so far in the hole come tax time :-(

ebaines
Jun 23, 2008, 08:14 AM
If you leave your employer while you have a loan outstanding from your 401(k) then the amount of the loan is considered a withdrawal. You will therefore have to pay (1) income taxes on the $15874 (federal as well as state, if you live in a state with income tax), and (2) a 10% early withdrawal penalty (assuming you are under 55 years of age and don't qualify for one of the exceptions to the penalty). Since I don't know what tax bracket you are in, I would suggest that yoyu plan on 20% for income tax + 10% penalty = $4700 in federal payments, plus whatever you may need for your sate income tax.