[bradclough]

I am taking a 401k hardship withdrawal for 55,000 how do they tax me and out of that , how much can I expect to get? Do they take all of this upfront?

[Clough]

Hi, bradclough!

I'm sorry, but I don't have an answer to your question.

However, the thread that you started here was pointed out to me by a friend because of your name.

I hope that you don't mind my posting here. However, if that's your real name, we might even be related!

The Tax Experts here are excellent, by the way!

Thanks!

[ebaines]

If you take a $55K withdrawal they should automatically withhold 20% for income tax. So the check they send you should be in the amount of 80% of $55K, or $44K. However, remember that the $55K is considered ordinary income, and so is added to your other income for purposes of determining your tax bracket. It is quite possible that the 20% they withhold is not sufficient for your higher income level, so you may owe more to the IRS when you figure your taxes next April. In addition, if you are under age 59-1/2 you will also have to pay the 10% early withdrawal penalty, and also don't forget state/local income taxes (if applicable where you live). They will not automaticaly withhold for these additional taxes. So next April you will need to have enough cash reserves to pay (A) $5,500 in early withdrawal penalty, (b) state/local income tax on $55K income, and (c) any additional tax above 20% that you may owe the IRS on this income. Bottom line is don't plan on spending more than about $33K of the withdrawal, or you may have a cash shortfall.