401 Withdrawal

Forum|Forum|6 years ago
July 4, 2019
1 reply
6 views

How do I know how much tax to have applied for an early withdrawal from a 401k? In my 30's lost my job. I am currently in the 24% tax bracket.

TurboTax

macuser_22

Alumni - Champ

20% is the mandatory withholding but you can request more. If you are under age 55* then there will be a 10% early distribution penalty in addition to the normal tax. 34% should cover both the tax and penalty.

(* The normal under age 59 1/2 penalty is waived if you leave employment with the plan sponsor and are age 55 or more.)

{edited to correct age 55 typo]

**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.**

dmertz

Level 15

The penalty exception is for leaving service with the company in or after the year you reach age 50 is for public safety employees, for others the exception is for leaving service with the company in or after the year you reach age 55. Since you left service with this company in your 30s, this exception does not apply.