401k taxes

Forum|Forum|3 years ago
February 16, 2023
2 replies
37 views

is it wise to overpay taxes when making 401k withdrawal knowing you'll get a refund?

CatinaT1

Level 15

When you make a withdrawal from a 401k, it is taxed and if you are under 59 1/2 you are also penalized.

The total tax for the withdrawal is not calculated until you file your return and is based on your total taxable income.

Suppose you have too much withheld from your distribution. In that case, you will receive any overpayment in your refund (or it will be applied toward your total tax liability, reducing any payment due).

It is a personal decision if you want to have additional withheld so you have a larger refund.

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Mike9241

Level 15

consider that by overpaying your taxes you are making an interest free loan to the US Gov't. many people deliberately overpay to get a refund for many reasons. it's really your decision.

Mike9241