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cyorgy
Level 1
Jun 6, 2019 10:39 AM UTC
Solved

401k withdrawal penalty

My husbands company was recently sold.  He had a $20,000 loan outstanding.  His options are to pay it back or take it as a withdrawal.  We are in the 25% tax bracket, will we owe 35% with the 10% penalty so $7000 come tax time next year?
MinhT1Answer
Alumni - Intuit
Jun 6, 2019 10:39 AM UTC

Yes, you are correct. If the distribution (withdrawal) occurs before age 59.5, there is an early withdrawal penalty of 10% of the amount of the distribution in addition to the income tax at your tax bracket.

There are exceptions for the early withdrawal penalty:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

 



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MinhT1Answer
Alumni - Intuit
Jun 6, 2019 10:39 AM UTC

Yes, you are correct. If the distribution (withdrawal) occurs before age 59.5, there is an early withdrawal penalty of 10% of the amount of the distribution in addition to the income tax at your tax bracket.

There are exceptions for the early withdrawal penalty:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...

 



**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"
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