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blizbiggy
New Member

If I were to refund my PERS retirement fund here in Ohio, is the 10% income tax penalty for my ENTIRE income or is it for JUST the amount getting refunded to me?

I wasn't quite sure if the 10% penalty was for my entire income for the year or just what I am getting refunded.  Some insight on this would be helpful and yes, I'm under 59 1/2.

3 Replies
ChristinaS
New Member

If I were to refund my PERS retirement fund here in Ohio, is the 10% income tax penalty for my ENTIRE income or is it for JUST the amount getting refunded to me?

The 10% early withdrawal penalty would be on the taxable amount of the retirement income that you receive. The taxable amount may be lower than the distribution if you made after-tax contributions into the plan while you were working.

The taxable amount isn't impacted by taxes withheld on the distribution, if that's what you mean.

If you remove $10,000 from the account and withhold $3000 for tax, your 10% penalty is on $10,000. If you made $500 in after tax contributions, your taxable amount would be $9500 instead of $10,000. The amount of the check after withholding is never relevant in taxation, just like its not relevant when you get a W2. Your W2 income subject to tax is not reduced by any taxes withheld.

blizbiggy
New Member

If I were to refund my PERS retirement fund here in Ohio, is the 10% income tax penalty for my ENTIRE income or is it for JUST the amount getting refunded to me?

So the tax penalty is only attached to the retirement return and not the rest of my income.  Thanks for the answer!
ChristinaS
New Member

If I were to refund my PERS retirement fund here in Ohio, is the 10% income tax penalty for my ENTIRE income or is it for JUST the amount getting refunded to me?

Correct... your retirement penalty is only associated with your retirement income.
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