Can i use early withdrawl of roth 401K to pay back tax bill as tax except?

[SabrinaD2 · Accepted solution]

It looks like you're asking about using an early withdrawal from a Roth 401(k) to pay a tax bill. 

• Early Withdrawal Rules: Generally, early withdrawals from a Roth 401(k) are not tax-exempt unless they meet specific criteria. You must be at least 59½ years old, and the account must have been open for at least five years.  There is also a "rule of 55" exemption if you have left your job
• Taxes and Penalties: If you withdraw funds early, you may have to pay taxes on the earnings portion of the withdrawal, and a 10% early withdrawal penalty may apply
• The Good News: Post-Tax Contributions: If you withdraw only the post-tax contributions you made into the plan and not the earnings, that portion of the withdrawal is tax-free

For more detailed information, you can refer to these helpful IRS links:

• 401(k) Early Withdrawal: Understanding the Consequences

[dmertz]

Distributions from a Roth 401(k) are always a proportionate mix of contribution basis and earnings.  You are not permitted to obtain a distribution that consists entirely of contributions if, due to investment gains, the balance in the account is greater than the amount of contributions in the account.  The Roth IRA ordering rules do not apply to a Roth 401(k).

Using the distribution to pay taxes has no effect on the tax consequences of having received the distribution.

[bigdedition]

Thank you!