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

    Jun 28, 2008, 08:10 PM
    What are the taxes and penalty of withdrawing from a 401k plan?
    What penalty and tax rate would I have to pay if I cash in a 401k plan?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #2

    Jun 28, 2008, 08:21 PM
    Moved from forum help
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #3

    Jun 29, 2008, 12:10 AM
    The early withdrawal penalty is 10% and all the money withdrawal will be treated as ordinary income which you must report on your tax return.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Jun 30, 2008, 09:53 AM
    FOUR WORDS: DO NOT DO IT!

    Depending on your tax bracket, you could pay almost 50% in taxes on this money.

    For sure, you will pay the 10% Early Withdrawal Penalty, as that 10% CANNOT be mitigated by deductions or credits.

    More than likely, you would pay between 25% - 40%.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #5

    Jun 30, 2008, 10:38 AM
    The tax rate would depend on your tax bracket and whether there are local income taxes in addition to federal. Its posible the proceeds of the withdrawal will put you into a higher bracket increasing your total tax liability.

    So like ATE said DON'T DO IT!
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