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Level 2
June 1, 2019
Solved

I took out money from my 401 to pay down my mortgage, i paid 10% tax for the withdrawal, my taxes went way up? are there additional taxes i don't know about?

  • June 1, 2019
  • 2 replies
  • 32 views
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Best answer by macuser_22

Yes.  The entire 401(k) distribution is taxes as ordinary income at your margional tax rate.   If you are under 59 1/2 then there is an additional 10% penalty.   If 10% was withheld, it appears that only the penalty was accounted for and not the tax.   If you are in the 20% tax bracket then probably 30% should have been withheld.

2 replies

macuser_22
Alumni - Champ
Alumni - Champ
June 1, 2019

Yes.  The entire 401(k) distribution is taxes as ordinary income at your margional tax rate.   If you are under 59 1/2 then there is an additional 10% penalty.   If 10% was withheld, it appears that only the penalty was accounted for and not the tax.   If you are in the 20% tax bracket then probably 30% should have been withheld.

**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.**
neimacAuthor
Level 2
June 1, 2019
i am over 59.5 i'll have to check my tax bracket. Mahalo for the answer.