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Asked 6/5/2008
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How much tax is taken from my 401k if i take it out in a lump sum upon retirement? I am in the FERS retirement system. I wish to withdraw my 401K in a lump sum upon retirement. I was wondering what percentage of tax the government will take from it. |
Answer 1/1 - Submitted 10/14/2009
Any distribution paid out in a lump sum to the participant from a 401(k), must have at least 20% federal tax withheld. Some state require withholding as well, (AK,CA, DE, IA, KS, ME, MD, MA, NE, NC, OK, OR, VT and VA)
this is what the MUST withhold. . there is no guarantee it will be enough to cover all taxes due. Penalty will not apply if you are over 55 when you retire.. ( I assume that has already happened due to the age of the question)
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