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Asked 1/16/2009
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What is the penalty for pulling out on a 401K? Example. If we have $15,000 in a 401K and draw it out before retirement. What percentage gets taken out? How would that affect a tax bracket of about $100k income for the year already? What is taken out immediately and what is taxed at the end of they year? |
Answer 1/2 - Submitted 1/16/2009
The penalty is 10%. For you that is $1500. Then you have to pay income tax on the money withdrawn. Depending on how you arrange it, the managing company will withhold 20% for tax purposes. If your net income is already $100,000 and you file a joint account, that would probably be enough.
Answer 2/2 - Submitted 12/28/2009
If you can live without the money and just want out of the 401K, roll it plan to plan to an IRA - your bank or and investment company can help you. If you are taking the money because you lost your job or are in hardship there may be an exception to the penalty. If you take the money - whatever tax bracket you find yourself in after deductions will be the tax bracket you pay tax on that money PLUS a 10% penalty for early withdrawal.
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