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    schuttpelz's Avatar
    schuttpelz Posts: 2, Reputation: 1
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    #1

    Feb 18, 2006, 04:08 PM
    Taxes on 401k cash out
    I have cashed out my 401k to invest in a home. The deal did not go through and lost $3,100.00 on the attempted purchase.

    The holding company of the 401k withheld 20% of the money to send to IRS. I have been living on the proceeds of the 401k for 6 months. I did have a job before the cash out, made about $9200.

    The amount of the cash out was $36,000.00 with 20% withheld, it was $29,880.00.

    My questions are these.
    Do I owe for Medicare and Social Security on the $36,000.00? If so how do I calculate based on this information?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Feb 18, 2006, 06:15 PM
    You owe NO Medicare and Social Security; those taxes were paid when you made the contributions to the 401K.

    You do owe a 10% early withdrawal penalty in addition to normal taxes.
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