What penalties are there for withdrawing from retirement ?

[shanmccool64]

I have a 401 k from previous employer and I want to withdrawal from that retirement, but I want to know what kind of penalties there are when filing taxes.

[DoninGA]

If you are under age 59 1/2 or were under age 55 when you separated from the previous employer then there will be a 10% early distribution penalty assessed on your federal tax return Form 1040.  The penalty is assessed on the gross amount distributed and entered as a tax liability on your tax return.

The distribution will be reported to you on a Form 1099-R.  The form is mailed to you by the plan administrator in January of the year.  The amount distributed is entered on your tax return as ordinary income and taxed at your current tax rate.  Any taxes withheld from the distribution are entered on your tax return as a tax payment.

[VolvoGirl]

Be careful.   It will add to your income and may push you into a higher tax bracket.  You can lose like up to 50% of it for taxes and penalties for federal and state.  If you don't need it all consider rolling some of it over to a IRA or split it up taking some out this year and some next year etc.  

[Opus 17]

You always pay regular income tax (unless this is a Roth option account in your 401k plan).  

If you were under age 55 when you left the company, and you are under 59-1/2 now, you will also pay a 10% penalty.  If this is a Roth option account, you will pay income tax and a penalty on any earnings you withdraw, but I don't believe the principle contributions are taxed.

401k plans do not have the same penalty exceptions that IRAs have.  There are certain reasons you can withdraw money and be exempt from the penalty, and some of the reasons apply to IRA but not 401k plans.  In that case, you can do a rollover from the 401k to an IRA and then withdraw the money from the IRA.