View Full Version : Avoiding 401k early disbursement penalties
cathyjean
Mar 30, 2009, 08:33 AM
OK - we pulled out $ knowing we were going to pay, but we're trying to find a way around paying BIG time. We pulled out 44K early to put down on an investment condo in FL. We aren't anywhere near 59 1/2. We'd like to see 1) if there is a way to around paying the 10% penalty plus the exorbitant taxes or 2) how we address paying the huge amount to the IRS in installments.
Thanks for any advise you have.
ebaines
Mar 30, 2009, 08:57 AM
Sorry, but there is no way to avoid the 10% early withdrawal penalty, unless the distribution is to cover medical expenses that are greater than 7.5% of your income. And there's no way to avoid paying the regular income tax on the distribution. There should already have been 20% withholding on the distribution.
MaggieMouse
Apr 1, 2009, 02:57 PM
Cannot avoid paying the penalty but look at it this way: if your condo investment yield a return more than the penalty then just treat the penalty of cost of your capital.