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mamasu2 · Apr 7, 2007, 01:17 PM

:confused: Could someone answer a really weird question ? can I use my very small 401k to pay the irs?
thanx,
mamasu2

Mobea · Apr 7, 2007, 05:46 PM

I would Definitely advise against that. You would end up paying 30-50% taxes and penalties on the money that you would withdraw from it. It just doesn't make sense to do that. If you owe the IRS, they will set up a payment plan with you that is usually at relatively reasonable interest rate. Or you can pay with a credit card. But it just isn't a good idea to use your 401K to pay the IRS. No, No and double no no.

mamasu2 · Apr 8, 2007, 02:29 AM

Thank you so much for your response. I am already on a payment plan. I have been paying them 200.00 a month for two yrs and i still owe as much as I ever did..I would rather take out what I can get and try to do it that way, there has to be a better way...but again thank you for your answer.
mamasu2:)

ScottGem · Apr 8, 2007, 05:17 AM

See if you can take a loan against the 401K. At least then you will be paying yourself back.

mamasu2 · Apr 8, 2007, 10:56 AM

Thank you so much for your answer. I am going to look into asking for a loan.mamasu2

AtlantaTaxExpert · Apr 17, 2007, 10:49 AM

Agreed! Loan is the best option, though you MAY want to look into an Offer in Compromise.

mamasu2 · Apr 17, 2007, 01:44 PM

I don't have enough available for a loan,, this is too confusing for me... I need to just take out the entire 401k, but I don't want to quit my job, just yet.

ScottGem · Apr 17, 2007, 04:08 PM

You don't need to quit your job to wiothdraw money from your 401K. However, with tax liability and 10% penalty, it doesn't really make sense to do so.

AtlantaTaxExpert · Apr 24, 2007, 09:20 AM

If your payment plan is not cutting down the amount of tax owed, you need to talk with the IRS about an Offer in Compromise.