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    thoma09's Avatar
    thoma09 Posts: 2, Reputation: 1
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    #1

    Dec 9, 2008, 02:46 PM
    Early 401k withdrawl
    I withdrew my 401k earlier this yr to pay off all my debt since I was in between jobs. I had two withdrawals on which, instead of paying 20%, I voluntarily paid 30%. Will this make much of a difference when I have to do my taxes for this yr regarding the penalty I pay? I am single, and income of around $40,000/yr gross.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Dec 9, 2008, 03:00 PM

    Does your $40K "gross" income include the withdrawal from your 401(k)? If so, and your total income is $40K, then the 30% you had withheld is probably more than you needed. $40K income puts you in the 15% bracket (assuming you are married filing jointly), plus 10% penalty gets you to 25% total. So you may get a bit of a refund. But don't forget if you live in state with income tax you will have to pay them as well.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Dec 9, 2008, 03:06 PM
    ebaines:

    He stated that he was single, so his marginal tax rate is 25%, so I suspect that he may have to pay something come tax time.

    Thoma09:

    A breakout of how much of the $40K is 401K distribution and how much is salary will help us give you an estimate on your tax liability.
    thoma09's Avatar
    thoma09 Posts: 2, Reputation: 1
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    #4

    Dec 9, 2008, 03:11 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    ebaines:

    He stated that he was single, so his marginal tax rate is 25%, so I suspect that he may have to pay something come tax time.

    Thoma09:

    A breakout of how much of the $40K is 401K distribution and how much is salary will help us give you an estimate on your tax liability.
    OK, add the distribution and my gross would be around $58k
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #5

    Dec 9, 2008, 03:11 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    ebaines:

    He stated that he was single...

    Yep - missed that - thanks!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #6

    Dec 10, 2008, 01:16 PM
    Thoma09:

    Your federal tax liability is about $8,650 and the 10% Early Withdrawal Penalty is $4,000, for a total of $12,650.
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