I took a withdrawal from my 401(k), which had 20% tax taken off the top. Am I still going to have to pay taxes on it at the end of the year?

Forum|Forum|1 year ago
June 19, 2025
2 replies
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Best answer by Opus 17

Expert Reviewed

That depends, but probably.

Your tax bill for the whole year is determined one time, on your tax return, using all your income, deductions and credits. Your 401k withdrawal is taxed as ordinary income, which might be 12%, 22% or higher, depending on your other income. Plus a 10% penalty for early withdrawal if you are under age 59-1/2. (But if you separated from service from this employer at age 55 or older, you are exempt from the penalty.). You report the withdrawal as income, with all your other income, and you get credit for the withholding, with all your other withholding, but it might not be enough.

The tax on this income could be from 12% to 36% or even higher, plus state income taxes, depending on all other factors. If you normally get a large refund, that might absorb some of the additional tax and just reduce your refund, or you might owe when you file.

You can try this tool to estimate your situation,

https://www.irs.gov/individuals/tax-withholding-estimator

O

Opus 17

Answer

Level 15

Expert Reviewed

That depends, but probably.

Your tax bill for the whole year is determined one time, on your tax return, using all your income, deductions and credits. Your 401k withdrawal is taxed as ordinary income, which might be 12%, 22% or higher, depending on your other income. Plus a 10% penalty for early withdrawal if you are under age 59-1/2. (But if you separated from service from this employer at age 55 or older, you are exempt from the penalty.). You report the withdrawal as income, with all your other income, and you get credit for the withholding, with all your other withholding, but it might not be enough.

The tax on this income could be from 12% to 36% or even higher, plus state income taxes, depending on all other factors. If you normally get a large refund, that might absorb some of the additional tax and just reduce your refund, or you might owe when you file.

You can try this tool to estimate your situation,

https://www.irs.gov/individuals/tax-withholding-estimator

VolvoGirl

Level 15

Depends on your other income. You didn't actually pay the tax or the 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You had taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket and can reduce any credits) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.

V

vickiebean

Level 2

I am 60 years old and tried to do an early withdrawal, they charged 20%. I called to confirm and yes it is 20%, not 10%.

VolvoGirl

Level 15

Then if they took out 20% you might get the excess back when you file your tax return. You will get a 1099R in January to enter into your tax return.

You don't actually pay the tax or the 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You have taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.