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    GeoffreWillis's Avatar
    GeoffreWillis Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jun 17, 2007, 05:44 PM
    401k penalties
    I recently left a temp job (2 years) and have about 25k in the 401k. While I know that the smart move is to roll the 401k into an IRA, I could actually use the money for some home expenses. I am in the 28% tax bracket. How much of the 25k could I expect to see after taxes/penalties?
    RichardBondMan's Avatar
    RichardBondMan Posts: 832, Reputation: 66
    Senior Member
    		  
    #2

    Jun 17, 2007, 06:28 PM
    Quite a bit, 10 % immediately then you pay income taxes on the proceeds just as if they were earned income when you file your tax return for 2007. I suggest another alternative such as a loan or better yet a part time job or overtime to pay the home expenses.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Jun 18, 2007, 10:50 AM
    Agree with Richard.

    You could end up paying about 35-40% total in taxes and penalties on that early 401K distribution.

    DO NOT DO IT!
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