I have a 401K question about early withdrawal.
I quit my job about 5 years ago where this 401k is. (I do have a new employer.)
I am allowed a full payout, with the penalties.
401K balance - $5000.00 (apprx)
I have the understanding that 20% is immediately taken out for federal taxes with an early withdrawal, which would be in this case $1000.00, and that would make the distribution check $4000.00.
My questions are:
When does the 10% penalty come into play?
Is it 10% of the total balance? Or what was already taxed?
Is the penalty taken out of your refund? Or when will I have to pay it?
I am just confused about the extra 10% and when I need to pay it. The guy at fidelity said the 10% also depends on what your tax bracket is, so you might owe more or less. So now I am totally confused.
I do not want to roll this over to an IRA. I need this money to pay medical bills.
Thank you so much!