I am 3o years of age; and I am about to leave my current employment of 8 years. I have in my 401k plan about $50k and I have an outstanding loan in the amount of $11k. I would like to withdraw the entire amount because I will be going back to school and will not be employed. How long will the process take? How much will I take home? How much if any will be considered as taxable income to be included on my 2008 tax return? The amount that I will have to pay taxes on will it be included once I make the withdraw? If not, how can I determined the amount I need to save for taxes? In addition, I will take 16,000 to pay off my house. I am needing help to prepare for what will occur once I take the withdrawl?

Helpmeplease89

All the withdrawal from 401K will be subject to 10% early withdrawal penalty. Then, the entire withdrawal will be your ordinary income.
So to make sure you pay minimum income tax, withdraw in the year you have minimum income. Also if you have to withdraw in 2008, then may be withdraw some money in 2008 and some in 2009, if you expect income in 2009 to be low.
Even if you have to withdraw to pay off your house, you will still pay 10% penalty.

The 20% withholding on your 401K is just a down payment on the tax bill, which will range from 25% to 46%, depending on your overall income level.