If I were to take out $3000 from my 401k, how much would I get back after taxes/irs penalty?

Question

I'm 26 years old and have about $16,000 in my 401k. If I were to withdraw $3000 (not as a loan) to pay for a European vacation, about how much would I get after govt taxes IRS early withdrawl penalty (10%)? Thanks!!!

PS: I earn about $35,000 anually

Answer 1

If you are under 59 ½ the penalty will be 10 percent plus the amount of your withdrawal will be added to your gross income, and taxed at your normal bracket. For example if you make $40,000 per a year you would have to pay taxes that year on the equivalent of $43,000. (and the penalty). So that $3000 withdrawal will cost you apx $700 in taxes, and $300 in penalty. Check to see if your employer has a loan provision in the plan the will allow you to repay the $3000 on an installment basis. This loan question could be answered by someone in your HR department.

Financal Advisor ~ 18 years

Answer 2

You are probably in a 15% bracket, so income taxes would be around $450. The additional penalty would be $300. Total tax would be $750, so you'd actually get $2250 although your 401K balance would go down by $3000. Depending on where you live, there might be state taxes also.

Most 401K plans do not allow you to withdraw money from the plan except for specific reasons (and those don't include vacations) if you are still employed with the company. Check yours before you make your reservations.

You could just suspend your contributions to the plan, and save than money until you had enough for your vacation.

Answer 3

They will withhold 20% automatically and there is no way around that. So your check would be for $2400. The penalty will be added next year at tax filing. And the $3000 will be added to your wages to arrive at your adjusted gross income. Which, depending on your income, put you in a higher tax bracket.

Please reconsider doing this. It has been proven that the money you withdraw today will cost you 10 or 20 or 30 times more down the road.

And if you are counting on social security, HA! If you are under 30 you will be lucky to live long enough to draw a dime from the money stolen from you now. My estimate is that the "retirement" age will go up to 80 years old within the next 10 years. Anyone younger than 50 is screwed.

So our only option to not working until the day we die is our own savings. And your $3000 trip might end up costing you $30,000 in retirement money lost.

In either event, have fun if you go.

Answer 4

You are in at most the 15% tax bracket. If you took a $3,000 distribution from a 401k from a former employer, you would expect $450 to go to inome taxes plus $300 in penalty, for a total tax of $750.

So you would receive slightly more than $2,000. Don't forget you may owe state income tax as well, if your state has an income tax.

Answer 5

You can't withdraw except for medical ,education,or if buying a home. It will cost you more in the long run, anyway. It would be better
to take out a loan from it or even better a loan from the bank.
The interest rates and early withdrawal penalties are high. It will be counted as income on your taxes and you will also have to pay tax on it at the end of the year. I know. I had to do
it for medical reasons. I had to pay dearly and you do not get the full amount you need.

Answer 6

Withdrawals before the age of 59½ is "Early withdrawal." There is a 10% penalty on it. The penalty will be $300.

The withdrawal from 401K is taxed at regular income rates. Assuming your income to be $35,000. If you are Single and no dependent, then your deductions are $8,750. Your taxable income will be $26,250 ($35,000 - $8,750) plus $3,000. Your highest tax rate is 15%. Thus on $3,000 you will pay additional federal tax of $450. Then there may be state tax.

Hence your additional tax on $3,000 (from 401k) will be $750 ($300 plus $450) plus any state tax.

Answer 7

Yes. Even if you are no longer with the company, the money in your 401K is still yours and is meant to be invested until you reach retirement age. If you withdraw it from the fund and don't roll it over into a new retirement account, you will pay the 10 percent penalty fee and the taxes on it as well.

Answer 8

Hi I am 49 years old and I want to borrow $3,000 from my 401k and my income is 25,000 a year or maybe a little less because I've been laid off. How much would I be penalized for.

Answer 9

You would loose $300 to penalty but tax wise ,
You did not give us the rest of your info to compute that .
It adds to your taxable income and ups your bracket $3000 .

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Answer 10

You can't withdraw though if you are still working for the company (still actively contributing to the plan). Did you know that?