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    pianoguy's Avatar
    pianoguy Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jul 15, 2008, 11:27 AM
    Early withdrawal fees 401k- how much will I suffer
    I am considering withdrawal of my 401k. My company is going to take 20%. I do not know how much the government will take. How much will they take and will it be taken before or after my company takes their 20%? Help!!
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Jul 15, 2008, 12:49 PM
    Your company can't "take" anything. Generally, if your company permits an inservice withdrawal they will WITHHOLD 20% towards your federal tax liability. In addition to that you will be charged a 10% penalty when you file your taxes next year. The amount of the withdrawal will be added to your annual income to determine your actual tax liability, towards which the 20% will be applied.

    I do NOT recommend this. Does your plan permit loans?
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #3

    Jul 16, 2008, 12:14 AM
    Early withdrawal from 401K is subject to 10% penalty. Also, the withdrawal will be taxes as ordinary income.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Jul 16, 2008, 06:58 AM
    DO NOT DO IT!

    Yo can expect to pay AT LEAST 25% in taxes and perhaps as much as 50% (depends on yor tax bracket and which state you live it).

    Compare to these taxes, borrowing from a credit card is a bargain!
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