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    phbgo135's Avatar
    phbgo135 Posts: 1, Reputation: 1
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    #1

    Feb 5, 2008, 04:17 PM
    401k early dstribution penalty and income tax
    I received an early distribution on my 401k. My understanding is that the 10% penalty is assessed first and then they deduct the taxes. Are both of those calculated on the top figure value of the account. Is the 10% penalty tax deductable? Can any part of the penalty be used to satisfy the income tax owed on the distribution?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Feb 5, 2008, 04:20 PM
    The 10% is based on the total amount of the distribution. So is the tax liability. The 10% is not deductible.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Feb 6, 2008, 03:24 PM
    Agreed.
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