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New Member
posted Jul 4, 2019 4:34:48 PM

401 Withdrawal

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.

0 2 849
2 Replies
Level 15
Jul 4, 2019 4:57:41 PM

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]

Level 15
Jul 5, 2019 7:08:15 AM

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.