[dsipl]

I had to take a huge withdrawal from my 401K, and now have to pay a huge tax bill. However, I don't have the funds available for such a large payment. IS there a way to spread this payment out over several years without huge penalties and interests? Or, is there some sort of way to average out my AGI for the past 5 years and forward to lower the amount due this year? I am 63, so there is no penalty for my withdrawal from my 401K, but just the income tax due is way too much. Any help is greatly appreciated.

[MukatA]

Make a Short-time Payment Arrangement with IRS. Click on the Online Payment Agreement link and follow the prompts. By entering some basic information about their tax situation, eligible taxpayers can set up in a matter of minutes either a short-term payment extension or a monthly payment plan. A short-term extension gives a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply.

Apply for Installment Agreement. A monthly payment plan or installment agreement gives a taxpayer more time to pay. Though interest still applies, the late-payment penalty is cut in half for any month an installment agreement is in effect. This reduced rate of 0.25 percent (1/4 of 1 percent) per month is only available if the tax return was filed on time.

A user fee will also be charged if the installment agreement is approved. The fee, normally $105, is reduced to $52, if taxpayers agree to make their monthly payments electronically through electronic funds withdrawal. The fee is $43 for eligible low-and-moderate-income taxpayers.

Alternatively, taxpayers can apply for a payment agreement by filling out Form 9465, Installment Agreement Request. This form can be filed along with either an electronically filed return or a paper return. If filing on paper, be sure to attach it to the front of the return.