Due to my employer being bought by different company, I will be rolling over a portion to new employer's 401(k) plan and cashing out a portion. They will withhold 20% federal and 5% state. Then I have to pay the 10% penalty. I'm using the Tax Withholding Estimator on the IRS website to help with what I may owe. In the estimator, I entered the amount of cash ($17,000) I'm getting from my 401(k) as income and it came up with what I will have to pay in 2021 for 2020 taxes if I keep my current withholdings. With the additional $17,000 added to my income, it will move me into the next tax bracket of 22%. Do I add the 10% penalty ($1,700) onto the amount that the IRS calculator shows that I will owe? I need to figure out how much more I need to withhold from my paychecks so that I won't owe as much when it comes to filing taxes in 2021. Thank you in advance for your help!
