Unfortunately, I have to cash out my 401k. My question is when I cash out my 401k can I pay 35% federal tax now to cover the 10% penalty assuming my tax rate is 25%?

Yes, but do NOT forget the state income tax, which you must also pay.

Depending on the state, your state tax burden ranges from ZERO to 12%.

Yes, but do NOT forget the state income tax, which you must also pay.

Depending on the state, your state tax burden ranges from ZERO to 12%.

Thank you.

Glad to help!