Tax Question: What happens if I take my money out of an IRA that was converted from a 401k?

Question

I have an IRA originally it was from a 401k, when I took this money out of the 401k I paid no interest, and recieved no penalty from taking this out since I rolled it over to an IRA. I need this money what happens if I take the money out now? What kind of fines and taxes will I pay on about $4,000?

Answer 1

You will have to pay a penalty plus federal tax plus what ever you pay in state tax based on you state. It is factored on your total income. I was going to pull some money out of mine and found the federal wanted over 40% and the state wanted another 10%. I believe the company holding your IRA will automatically hold out for the federal 20% when you pull the money and you will end up paying at the end of the year. Pull your tax returns from last year and figure it out. That is what I had to do.

I'm not pulling. I'm moving to a state that doesn't have state income tax and then I will pull the total amount which puts me in such a high tax bracket that it actually drops my federal liability. This is when it pays to have a lot of money.

Answer 2

If you withdraw some or all of the funds you will have to pay federal and state income tax on the amount withdrawn. In addition, if you are under age 59 and one-half you will have to pay a 10% federal early withdrawal penalty. There are exceptions to this penalty but you don't say what you are taking the money for. That is the effect now of taking a withdraw.
The future impact of doing it is that you are destroying your retirement funding and you will have to start saving again or figure that you will work until you die.

Answer 3

If IRA is less than 2 years old, 25% tax
If IRA is over 2 years old and you are less than 59 1/2 years old, then you pay 10% early withdrawal tax. Exceptions apply for early withdrawal when you or someone in your family is purchasing their first home (only up to $10,000 can be withdrawn), become disabled, terminally ill, going to college, or out of work and can't pay your health insurance premium. Only these exceptions is where you don't pay 10% penalty for early withdrawal.

Answer 4

regardless of if or no longer you could withdraw the money out of your 401(ok) relies upon on the regulations of this technique. as an occasion, in some plans you could ought to terminate the plan and roll over the money. in case you have left an company, then this is a no brainer: they are no longer contributing any further, so which you're in all possibility greater effectual off rolling that into yet another IRA (and regardless of if this is a Roth or 'classic' is yet another tale). the regulations are consistently changing, so this is maximum suitable to speak to the 401(ok) administrator and/or a tax expert.

Answer 5

For federal you'll pay tax on the amount withdrawn at your normal tax rate, which depends on your other income. If you're under 59-1/2 at the time you withdraw the money, you'll pay an additional 10% penalty.

State rules vary on this, so state taxes if any depend on where you live.

Answer 6

it may differ from state to state but usually you will have to pay income tax on the money plus a 10% penalty for early withdraw.