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    cathyjean's Avatar
    cathyjean Posts: 1, Reputation: 1
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    #1

    Mar 30, 2009, 08:33 AM
    Avoiding 401k early disbursement penalties
    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's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    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's Avatar
    MaggieMouse Posts: 226, Reputation: 8
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    #3

    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.
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