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

    Mar 15, 2007, 07:30 AM
    401k early withdrawl
    I was in a car accident last march and have been off work since. I received a letter stating I am terminated because of being off more than a year. I want to know in Kentucky what taxes and penalties I have to pay to get my 401k out if any :p
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Mar 18, 2007, 07:32 PM
    You will pay a 10% Early Withdrwal Penalty ON TOP of whatever normal taxes you would pay to the IRS and Kentucky. It could approacj 50% depending on how much you take.
    whiteladybug2002's Avatar
    whiteladybug2002 Posts: 235, Reputation: 36
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    #3

    Mar 18, 2007, 07:53 PM
    Honestly I don't know for sure, but we looked into that a few years back and with all the penalties; they were going to charge almost half. Taxes and Fees will suck you dry! Only get it out if it is your ONLY option! I think they should not be able to charge all the fees and fines, but they won't listen to me;)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Mar 21, 2007, 11:31 AM
    Understand that 401K and IRA are meant for RETIREMENT. The taxes and early withdrawal fee is meant to serve as a inhiobiting factr to prevent you from accessing the money before your retirement age.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #5

    Mar 21, 2007, 11:50 AM
    Quote Originally Posted by missynewton
    I was in a car accident last march and have been off of work since. I received a letter stating I am terminated because of being off more than a year. I want to know in Kentucky what taxes and penalties I have to pay to get my 401k out if any :p
    Your best option is to roll over the distribution into an IRA. However, you may qualify for avoiding the 10% penalty. Check with the plan administrator before a distribution is made.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #6

    Mar 23, 2007, 10:41 AM
    Scott's advice is very good. Follow it!
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