If your under 55 and 1/2 ,they will take an additional 10% for early withdraw.

I am 66 now so I am not concerned with a penalty. So, at 66, or at 70-1/2, if I want to take my 401K in a lump sum rather than the minimum required withdrawals, in addition to the 20% the government will take up front (will they take it up front?); is there anything else they will hit me with? I read somewhere that after they take their 20, they will apply to my tax bill next April. What will they apply? No one seems to be able to answer this. If I take my lump sum and put it under my mattress; what more can they take than their 20%?

Saying the IRS will take 20% is not totally accurate. 10% will be withheld and sent to the IRS for taxes (just like taxes are taken out of your paycheck), and 10% will be withheld and sent to the IRS for the famous early withdraw penalty. You may have a percentage withheld for state taxes as well - usually 5%. That's it. You'll get a check for the rest.

At the end of the year, you'll need to file your taxes of course, and that 10% that was withheld for taxes may turn out to be too little or too much. It depends on your tax bracket and your deductions, credits, etc.

I am planning on cashing out my balance in a few years when I move out of state, so I have done a lot of research on this so that I would know what to expect.

Good luck!

If the 401(k) trustee withholds 20%, then they will send that money to the IRS in your name. When time comes to do your tax return (and if you're taking out a hundred thousand, a tax return is required), the 20% withholding might be too little, just right, or not enough. It would depend on the rest of your taxable income. (For instance, if you're drawing Social Security, that large of a 401(k) distribution would make the SS partially taxable.)

At age 66, there is no early withdrawal penalty calculated or implied.

You can choose to ignore your taxes, and put the remainder of the money under your mattress, but in a couple years, the SSA will begin reducing your Social Security payments to pay your back taxes (if, indeed, the 20% proved to be not enough). On the flip side, if that 20% was more than you would actually owe, then the government will not refund you the excess, unless you file a tax return.

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Try not to take your 401K in a lump sum, but in periodic payments set up by a financial adviser. The taxes will be lesser due to you not having to add the lump sum on to the money you have already made for tax purposes. For example, say you made $80,000 for the year 2011 and then add $450,000 taken from your 401K (which you already paid taxes on, this will result in $530,000 for the tax year. Sounds crazy, but a professional tax preparer or a financial planner could explain this a lot better than I. Talk to someone before you make the withdrawal.

You should hire the C.A on this matter.Taking advice of different people may lend you in trouble.

I hope you have made the right decision by this time. Best to talk to a tax attorney rather than taking advice there.
After all, nobody knows whether you have other sources of income, and whether the withdrawal will push up to the top income bracket for taxation purpose.

The amount of the upfront tax is determined on your tax bracket, and your tax bracket could be raised based solely on the amount of money you withdraw. In addition to that, if you are under age 59 1/2 you will also be taxed an additional 10%. I generally hold that if I were to withdraw my 401k early I'd likely see about 60% of it. The reality is I'd probably see more than that, but it's a good roundabout figure. I agree that you should talk with a tax professional before making any decision to learn what your real tax obligations may be. What generally happens in most cases is that you receive all of the money upfront, and you are then responsible for paying whatever the taxes are when you file. This is where some people run into some problems as they miscalculate how much they will actually owe on taxes and then are unable to pay the amount due.