If I take out withdrawals from my 401k after age 59 1/2, are those distributions taxed as income?

Question

I figure they would be taxed since the money is paid into my 401k as pretax income. I know that a Roth IRA distributions aren't taxed after you've reached the minimum distribution age, but I can't seem to remember if 401k distributions are taxed after you reach the minimum distribution age. Thanks.

Answer 1

Yes, since you are getting the benefit now of not being taxed, they will be taxed when you take them out. A Roth IRA will NOT be taxed when you take distributions if they are after age 59 1/2.

Answer 2

Sad part about taking out a cash disbursement from a defined 401k after age 59 1/2 is the mandatory 20% Federal Withholding Tax plus another @% State Withholding Tax in California... Plus there is the scenario on whether only the tax deferred contributions are subject to the 20% Federal Tax buy any dollar amount earned above contributions should be only subject to the Long Term Capital Gains or Dividend Tax at 15% Federal Tax rate? Both withholding examples cannot be taxed at 20% rate... Just ask Mitt Romney's C.P.A.

Answer 3

Yes, your withdrawals will be taxed as ordinary income, but since you are over 59 1/2, you don't pay the 10% penalty you would pay for an earlier withdrawal. After that age, you can withdraw as much as you want, whenever you want, as long as you pay the taxes due.

Answer 4

You will be tax as ordinary income for that tax period (year) but if you are retired you might be in different tax bracket as suppose if you were still employed. I suggest the best time to receive income from IRA is when you are retiring and need income to suplement social security, and remember you need to take distribution by age 70 and half or you will be penalize. Speak to your accountant and see if you need to take distribution now.

Answer 5

401k Distribution Age

Answer 6

401k Withdrawal Age

Answer 7

Yes, they are taxed, since they were put aside tax free when you deposited them. The notion behind this concept is that you will most probably fall into lower tax brackets at retirement, thus incurring a smaller tax load than you would have had you put the funds away AFTER tax while still working.

Answer 8

Yes, you will get a penalty from the company (usually 10% plus a 20% tax penalty) right off the back. Then at the end of the year you claim the distribution on your taxes and depending on your tax bracket you could wind up with another 10-15% in tax penalties due to the distribution.

Answer 9

They are taxable with no penalty, but the question is, do you need the money now from your 401K? The long you hold onto it, the more you can make. You can draw on social security as 62. But there again, the longer you wait, the more you get. I started mine at 62 because my wife makes good money, plus you are allowed to make $12,900. If you want to start drawing on your 401 then, that's fine. Hope I helped.

Answer 10

hello...taxed as ordinary income...so be wise and only take out what you need and try to stay in the lower tax bracket