2007-10-11 04:24:27 · 7 answers · asked by lav 1 in Business & Finance ➔ Taxes ➔ United States
If you are talking about a 401k and you are single the tax and penalty could be as much as $26,000. You really want to think about other ways of accomplishing what it is that you may plan to use that $70k.
2007-10-11 04:33:42 · answer #1 · answered by ? 6 · 1⤊ 0⤋
I am assuming that this is a qualfied retirement plan or traditional IRA.
I would ask you why you are considering this distribution? Are you separated from your job? Do you have large medical expenses? Are you disabled? There are circumstances in which the penalty is reduced or eliminated.
But if there is no exception, since you are under age 59.5, you will pay income tax plus a 10% penalty on the distribution.
The worst case is that you take out all $70K, with an adjusted gross income of $90k, and a taxable income of over $81K, moving you into the 28% tax bracket.
Income tax: $17K (approximate)
Penalty: $7K
Total tax: $24K
Your current tax is probably under $1,500.
What you can do, if it is necessary for you to draw on this money, is to set up a series of substantially equal withdrawals over a period of at least five years. You will avoid the 10% penalty even though you are not 59.5, plus you will stay in the 15% tax bracket.
Your plan trustee can set this up for you. It will save you a fortune in taxes and may meet your needs.
2007-10-11 08:02:29 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
if you're talking IRA or 401k, you will be taxed on whatever bracket tax bracket you wind up in when you add the 70000 to your regular income, plus a 10% penalty for early withdrawal, because you're under 59-1/2. I'd say about 35% or 24,000+ in taxes and penalty, so you'd only be able to use $45,000 or so
2007-10-11 04:45:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Withdraw from what? A savings account? Sure, no sweat. An IRA? That will cost you dearly. A 401(k) while still working for the sponsoring employer? You probaby can't withdraw it at all unless you are disabled or to pay medical bills.
2007-10-11 04:36:22 · answer #4 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Withdraw from what?
2007-10-11 04:27:55 · answer #5 · answered by r_kav 4 · 0⤊ 0⤋
Question is not clear. Can you elaborate your question
2007-10-11 04:28:54 · answer #6 · answered by dailydollars1300 1 · 0⤊ 0⤋
Yes...sure...i don't see why not.
its your money, Use it when ever you want.
2007-10-11 04:28:07 · answer #7 · answered by MrRight 3 · 0⤊ 2⤋