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    sstokley's Avatar
    sstokley Posts: 6, Reputation: 1
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    #1

    Jan 23, 2008, 07:24 PM
    I cashed out my 401(k) early, anyone know what I can expect? :-)
    Hello everyone, new to the forum!

    I had a quick question, and from what I can see there are some really great people on here willing to help, I thank you in advance.

    I'm waiting to receive my 1099-R form and was curious as to what I should be expecting.

    Couple of questions:

    1.) We used the money I cashed out of my 401(k) for a home, does that qualify for any sort of an exemption?

    2.) I withdrew $16,523.63 from my 401(k) and I believe they taxed everything at 20% so I only ended up getting between $12.5-$13.5 if memory serves me correctly. My question is: When you withdraw to they generally take out enough in advance to where you don't have to owe anything extra at the end of the year? If so is it generally a tad more to be safe?

    Thank you guys so much, this is a HUGE stress off my back if I can get an answer.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #2

    Jan 23, 2008, 07:54 PM
    You will owe the 10 percent penalty on the money, If the 20 percent covers the federal tax due you should be OK, you will owe state tax on the money.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #3

    Jan 23, 2008, 08:09 PM
    No, While one of the reasons to allow an inservicewithdrawal is the purchase of a FIRST home, it doesn't exempt you from the 10% penalty. So you will have to pay $1653 has a penalty.

    The 20% is withholding NOT the tax amount. The $16.5K will be added to your taxable income for the year and used to calculate your total tax liability. That amount will then becompared toyour totalwithholding for the year (including the 20%) to determine if any additional amounts or a refund are due.
    sstokley's Avatar
    sstokley Posts: 6, Reputation: 1
    New Member
    		  
    #4

    Jan 23, 2008, 09:29 PM
    Quote Originally Posted by ScottGem
    No, While one of the reasons to allow an inservicewithdrawal is the purchase of a FIRST home, it doesn't exempt you from the 10% penalty. So you will have to pay $1653 has a penalty.

    The 20% is withholding NOT the tax amount. The $16.5K will be added to your taxable income for the year and used to calculate your total tax liability. That amount will then becompared toyour totalwithholding for the year (including the 20%) to determine if any additional amounts or a refund are due.

    -Thank you so much for all of your help, this really seems to have helped, I think I will be "ok"
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #5

    Jan 24, 2008, 09:02 AM
    Noted!
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