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    timskin38's Avatar
    timskin38 Posts: 1, Reputation: 1
    New Member

    Jan 11, 2006, 02:00 AM
    Cashed out my 401k
    Hi , I recently cashed out my 401k,I was 100 % vested I'm 40 yrs old, what are my taxes and pentalties of 15,700 dollars
    mr.yet's Avatar
    mr.yet Posts: 1,725, Reputation: 176
    Ultra Member

    Jan 11, 2006, 03:35 AM
    Approx. 20 to 30%
    RickJ's Avatar
    RickJ Posts: 7,762, Reputation: 864
    Uber Member

    Jan 11, 2006, 04:10 AM
    The penalty itself is 10%.

    After that the tax is capital gains; at the rate applicable for your income level.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Jan 11, 2006, 10:29 AM

    The percentages given by Mr. Yet may not be accurate. It depends on whether the 401K cashout is your only source of income, your filing status and whether you have dependents.

    Rickj's statement that the penalty is 10% IS accurate, and that 10% penalty cannot be mitigated! In other words, if you had a spouse and the $15,700 was your only taxable income, you would owe no income taxes because the combined total of your standard deduction ($10,000) and your personal exemptions ($3,200 each for $6,400) would exceed the $15,700. However, you would still owe the 10% ($1,570). You cannot apply exemption/deductions against the 10% penalty.

    Finally, the cashout is taxed as ordinary income, not as a capital gains!

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