Requesting a $90k payment from 401k, would I get the whole $90k now and pay penalty and tax in April or do they take the penalties and taxes out first and send remainder?

[SweetieJean]

Are you going to roll it over to an IRA?

[fanfare]

custodian will not take out your penalty unless you ask for more to be withheld, for example 30% instead of 20%.

[dmertz]

If the distribution is eligible for rollover (it is not an RMD, distribution of an excess contribution, a deemed distribution due to 401(k) loan default or a hardship distribution), the 401(k) plan is required to withhold a minimum of 20%, but as fanfare said, 20% will almost certainly not be sufficient to cover your additional income tax and early-distribution penalty resulting from a $90k 401(k) distribution.  If you wait until April 2019 and have a balance due, you could end up with a tax underpayment penalty on top of everything else.

[SweetieJean]

Remember state taxes as well.

[us334376]

So the custodian does take out tax first and then sends me a check for the remainder and then the 10% penalty gets taken out at tax time.

[dmertz]

The custodian takes out a minimum of 20% for federal taxes, but you can request that more be taken out to avoid an underpayment penalty.  The sum of income tax and early-distribution penalty resulting from this distribution is likely to be *more* than 30% in total; the marginal tax liability from this distribution and your balance due is not determined until you prepare your tax return and this income is combined with your other income and deductions.  If you wait until tax time to pay a balance due you might incur an underpayment penalty.