@LeviL wrote:
I recently left my employer as well and was planning to use some of the funds from my 457 plan to pay off student loans. I live in Washington State so there is no income tax, just federal taxes. The company my 457 plan is through (ICMA-RC) takes 20% when you do the withdrawal. I was told that is for the federal taxes. Will I be charged an additional income tax on my yearly taxes or will the tax be considered withdrawn already? I want to avoid paying the 20% twice as it would be about $20K.
The tax withheld will be in box 4 on your 1099-R form and will be applied to offset your overall tax. 20% is just the mandatory withholding - the actual tax depends on your other income and margional tax bracket. 20% may or may not be enough to pay the tax.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
