I am 55 and due to a strokeI ampermantly disabled. My income is frim ssi which is tax free and long ter disability insurance which is tax free because I paid 100% of th ptemiums in before tax dollars. I have approx. #365,000 in my 401k plan snd want towithdrw $30k for a down payment on a home. I live in Utah.I know that 20% is wiythheld auto matically, and I think I qualify in avoiding the 10% penalty due to hardship.I would also loke to withdrw an additional$20k for stem cell therapy that is not available in the u.s. but in europe they have done this for years with great results in recovery of the paralyses side.
My question is with state taxes what would be the total penalty from the IRS for this $50k withdrawal?I also have approx. $60k in equity in the home we now have.Shoild I sell the home and utilize the equity or take a hardship withdrawal from my 401k plan.Again my main question is how much of a $50 k withdrawal will I ulyimetely realise sfter taxes.
I am new to thi site, please forgivr the typing errors as I am one handed and some of my cognitive skills have been effected by the stroke.
Thank you regards, jerry salyer

You will not only have to pay taxes on it you will have to pay a early withdrawl penalty. Plus your taxable amount will go up as it will be included as income.

I withdrew early and got dinged really bad.

Find out if you can borrow on it first. Borrowing will not count as income.

May be more difficult now a daysm but you can also try to get a line of credit on the equity. This way you don't have to sell the home or borrow on the home (second mortgage).

I would you suggest you speak to a tax consult. This idea could be quite costly.

If your disabled or unemployed, you may get to roll this money over, and then use it, but check with your plan administrator for the particular rules that apply to you.

Many plans allow for tax free deductions for a first time home purchase, but since you already have a home, I don't think it wise to bother your 401K, at this time, either for a withdrawal, or a loan, unless its absolutely necessary.

They both can be not only costly, but a bad move in the long run. Research this more thoroughly before doing any thing.

"but check with your plan administrator for the particular rules that apply to you."

A simple phone call, will do that!

Comments on this post
salyerj52 (https://www.askmehelpdesk.com/members/salyerj52.html) disagrees: really didn't answer my question of how much rhe early withdrawal penalty would be. I knoe I am exempt from 10% of the penalty because I am disabled, but I don't know the entire scope of penalty percentages.

First, may I call your attention to the guidelines for using the comments feature found here:

https://www.askmehelpdesk.com/feedback/using-comments-feature-24951.html

The only penalty for early withdrawal is the 10% penalty. The hardship wthdrawal rules applies to ALLOWING a withdrawal. It does not exempt you from the penalty. Since you are under 59 1/2 you are subject to the penalty. Your disability MIGHT negate that, but I don't see any provision for it in the rules.

In addition to the 10% penalty, the amount of the withdrawals is added to your taxable income for the year. You then figure your tax liability on the whole amount. So we can't tell you what your tax liability will be without doing your tax return.