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Asked 5/30/2010
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Tax rate I want to pay off my mortgage with my 401K. The amount is $80,000.00. how much must I withdraw from my 401K to satisfy my state and federal income tax obligation presently' |
Answer 1/1 - Submitted 5/31/2010
The tax you would owe on that large of a distribution depends on your age, your filing status, your other income, adjustments and deductions. You're looking at 25% or more for federal, and 7-8% for state (depends on your state of residence).
If you are under age 59 1/2, there's a 10% early distribution penalty. If you are old enough to be drawing Social Security, you'll find that the SS becomes taxable.
Taking money out of a 401(k) in a big lump sum like this, to pay off a home mortgage, is usually not smart tax-wise.
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