Withdrawing from my 401k. Over 65. 20% gets held for taxes auto. Will be in 275k income range. Should I withhold 10% more? and what about state taxes?

[SweetieJean]

Are you going to roll any of it over?  If not, you will likely be in a very high Federal tax bracket.

http://fairmark.com/general-taxation/reference-room/2016-tax-rate-schedules/

Which state?

[vharvel]

Colorado

[SweetieJean]

The Colorado income tax system allows for a deduction of $24,000 per year on all retirement income for persons age 65 or older.  Colorado has a flat income tax rate of 4.63%.

[Zbucklyo]

Based on your income, you are likely in the 28% or more likely 33% marginal tax bracket, so 20% would not cover the entire amount of additional taxes from the withdrawal.  I'd ask to have more withheld.

[vharvel]

Yes, I am thinking 10% more would work after deductions but what about state taxes?

[SweetieJean]

Also be aware that itemized deducitons and personal exemptions phaseout at high income levels.

[vharvel]

Ok, thanks very much

[SweetieJean]

If you do not need the money right away, consider rolling some or all of it into an IRA.  30% federal + 5% state will eat up a lot of your money.

[Critter]

Agreed ... unless you need all of it this year please consider rolling all or part of it over then taking it as you need it over several tax years to minimize the tax bite.  If you have not talked to a financial planner to discuss your options you really really should before you give away that much in taxes.

[SweetieJean]

Over the years, I have known several folks who took out a large lump sum to buy a house, payoff a mortgage, or do something similar. Every one of them regretted it later.