topic I’d like to ask an accountant a question before I file my taxes for next year. I withdrew from 401k and trying to set $$ aside to pay? in Retirement tax questions

I’d like to ask an accountant a question before I file my taxes for next year. I withdrew from 401k and trying to set $$ aside to pay?

chelle9054 — Sat, 09 Nov 2019 17:22:07 GMT

Re: I’d like to ask an accountant a question before I file my taxes for next year. I withdrew from 401k and trying to set $$ aside to pay?

VolvoGirl — Sat, 09 Nov 2019 17:26:19 GMT

Whats your question? They will probably take out like 20% Federal withholding. The gross distribution will add to your income and it taxable. The withholding may not cover the extra tax on all your income. Plus there is a 10% Early Withdrawal Penalty if you are under 59 1/2.

Do you want to send in some extra payment? Here are the blank estimate forms and instructions for federal. You need to go to your state's website to get theirs.

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2019 Estimate

Re: I’d like to ask an accountant a question before I file my taxes for next year. I withdrew from 401k and trying to set $$ aside to pay?

DoninGA — Sat, 09 Nov 2019 17:29:37 GMT

The plan administrator for the 401(k) account is required to withhold 20% for federal income taxes.

You will receive a Form 1099-R from the plan administrator in January of 2020 for the withdrawal. The 1099-R is entered on your tax return, the taxable amount of the withdrawal is entered on your tax return as ordinary income and taxed at your current tax rate. The federal taxes withheld are entered on your tax return as a tax payment (just like from a W-2).

If you do not meet the age exceptions for the early withdrawal penalty then the 10% early withdrawal penalty will be assessed on your federal tax return and entered as a tax liability on the return.