401k withdrawal question

[janfortuno]

I am 63, I withdrew from my 401k to pay my student loan off. At that time i was told that due to my age i would not have to pay taxes on this withdrawal. When I did Turbo Tax I see that I am paying taxes on this. Can you explain this? Thanks

[ChristinaS · Accepted solution]

Is this a Roth 401(k)? If not-

I'm afraid you either misunderstood the person you spoke with, or the person gave you horrendous advice.

When you turn 59 1/2, you no longer have to pay a 10% penalty for taking an early withdrawal.

While you don't pay a penalty, you still pay income tax. You get the tax benefit of 401(k) contributions as you contribute to the plan. When you take the money out, it is 100% taxable. The only time its not 100% taxable (by the federal) is if you made post-tax contributions into the plan (which would be a Roth 401(k), not a "regular" 401(k)).