[LIMEY69]

If I take the entire amount of my 401 out do I have to pay any taxes? I am 68 1/2

[ScottGem]

First, its not a good idea to piggyback your question on another thread. To avoid confusion, your question has been moved to its own thread.

Yes, you will need to pay taxes. The principle behind a 401(k) is that the money deposited into your account has not been taxed. Taxes are deferred until you withdraw the funds. So the taxes will be due when you withdraw. The expectation is that, if you wait until retirement your taxable income will be lower and, therefore, your tax rate will be less.

[ebaines]

Just to add to what ScottGem said - the tax you will owe the IRS is ordinary income tax on the full amount of the withdrawal, plus state/local income taxes if applicable where you live. The 401(k) administrator will most likely automatically withhold 20% of the withdrawal for federal income taxe purposes, similar to how employers withhold income taxes from their employees' pay checks. Whether 20% is the actual amount of tax owed on the withdrawal depends on your income tax bracket. Note that they will not withhold state/local taxes, so if these taxes are owed be sure to keep a cash reserve so you can pay it with your state/local income tax filing next April.