If you take money out of a 401K before you are 59 1/2, you are subject to a 10% early withdrawal penalty. You say you will be OLDER than 59 1/2 when you take the distribution, so that you will not be subject to an early withdrawal penalty. You will, of course, be subject to ordinary income tax on the withdrawal. When you take your money out, the fund will withhold an estimated amount for tax---similar to the way an employer withholds tax from your paycheck.
You will receive a 1099R to enter on your tax return at tax time next year. Your tax will be calculated based on the total amount of income you had and on the amount of tax withheld from the distribution. The money will be taxed at the same rate as your other income.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
