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401K disbursement question
Hi, I'm going to be laid off my current employer come Nov. and I have a total balance of 4271.20 in my 401k (consisting of $3,766.61 in total contributions, and a loan balance of 504.59). I was thinking of getting it disbursed once my employment is up. How much can I expect to get back? By the way, I live in the state of WA.
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If you take the disbribution the plan admin will withhold about $850 (20%) for federal taxes. So you will actually receive a check for about $2700 ($3766-504-850). At tax time you will pay an additional $427 as the early withdrawal penalty. In addition, you may have to pay additional federal and local taxes depending on your tax bracket. The $4271 will be reported as additional income. For the year and figured into your tax liability. The 20% withholding is just an amount in anticipation of what you will owe. So you can figure to clear around $2300 (give or take).
If you don't take a distribution or roll over the distribution you will have to make up the loan balance. Otherwise it will be considered a withdrawal and you will have to pay taxes and penalties on it. |
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