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    chauncy64's Avatar
    chauncy64 Posts: 1, Reputation: 1
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    #1

    Nov 14, 2009, 09:03 AM
    Early withdrawl from 401K estimated taxes owed
    I took an early withdrawl from my 401k and I want to estimate the taxes that I will owe. I know there is the standard 20%. A 10% penalty and 10% for taxes. Am I correct and saying that I have to add that withdrawl as income and then check to see what tax bracket I will fall in. For example annual income is ~ 100K + 50K withdrawl = ~ 150K income which falls in to the 28% income tax bracket. So to figure out how much money I need to pay in taxes on the withdrawl money (50K) I multiplied the 50K by 28% and got ~
    14K. Is that an accurate guess ?
    Five Rings's Avatar
    Five Rings Posts: 459, Reputation: 7
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    #2

    Nov 15, 2009, 11:11 AM

    Yep, that's pretty accurate.

    Now add 10% tax on the $50,000 ($5,000) as the penalty tax on early withdrawal.

    This type of withdrawal should be avoided at all costs. Borrow the money elsewhere if possible.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Nov 16, 2009, 11:21 AM
    Let us NOT forget the state income tax liability, which can be as high as 9.55% in California.
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