Yes, I'm under 59 1/2...
2007-12-07 01:50:42 · 13 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
It's the standard tax effect on your income and an additional 10%. If you don't need the money I would consider rolling it over into another plan.
2007-12-07 02:29:15 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Make sure you have your 401(k) custodian do a direct transfer to an IRA if you want to fully avoid tax on a rollover.
It is true that you have, at least theoretically, 60 days to rollover the funds into an IRA without tax or penalty. However, if you receive the check yourself the custodian is required to withhold 20% for federal taxes. That money is credited to you on your 1040, but it means you will be short of funds to rollover by 20%.
The result would be that, unless you could come up with the money from other sources, you would have to pay tax and penalty on 20% of your distribution.
2007-12-07 15:23:54 · answer #2 · answered by taxreff 7 · 0⤊ 0⤋
The withdrawal is taxed at whatever your tax rate is. But since you are under 59-1/2, there is an additional penalty of 10% of the amount withdrawn.
2007-12-07 10:45:06 · answer #3 · answered by Judy 7 · 2⤊ 0⤋
it gets added to your total income for that year...so you pay tax at the regular rate...and you are required to pay a 10% penalty on it in addition. if you are changing jobs your best bet is to NOT take it out. have your old job roll it over to another 401k at your new job OR if you new job doesnt give you that option...roll it over into a traditional IRA. You only have like 60 days or so after they cut the check to do this so you have to be quick otherwise it doesnt count. if you do that then it wont count as income nor will you be charged the 10% penalty. its better if the job can do it for you, the rolling over of it...like so you never have a check from them so the IRs can say that you had the money in hand...but if it cant be done that way...AS SOON AS you get the check go open a TRADITIONAL IRA because its like apples to apples then and you should be ok...just remember it has to be within 60 days!!
Good luck
2007-12-07 10:00:31 · answer #4 · answered by imaginadia510 2 · 7⤊ 0⤋
If you plan on keeping it in a 401k plan you don't have to cash out. It can be transferred from on plan to another without a tax penalty.
There are some forms that need to be filled out but don't cash out that money can only grow with time.
2007-12-07 10:00:03 · answer #5 · answered by Anonymous · 5⤊ 0⤋
10% penalty and you will be taxed at your ordinary rate. Don't take it out in cash, it will only hurt you in the end.. Roll it over to an IRA.
2007-12-07 10:21:10 · answer #6 · answered by zinf32000 2 · 4⤊ 0⤋
Don't do it!!!!
It's something like a 20% penalty when you withdraw, and then you have to claim the money as income on your taxes, which means that you'll be taxed on the entire amount (pre-penalty!).
I would say to either roll the money into a Roth IRA, or simply leave it there until you're established at your new job and roll it into that 401k. You don't have to take it with you right then and there when you leave.
Either option will avoid the penalties!
2007-12-07 10:11:37 · answer #7 · answered by sylvia 6 · 2⤊ 4⤋
Unless you absolutely need the cash, roll it over into an IRA, with no tax consequences.
2007-12-07 10:05:07 · answer #8 · answered by Mr. Prefect 6 · 5⤊ 0⤋
10% penalty of the amount of the distribution, unless you roll it over into a qualified plan such as a tradtionial IRA within 60 days.
The tax depends on your tax bracket.
2007-12-07 09:58:36 · answer #9 · answered by Anonymous · 8⤊ 0⤋
Do not touch the money. Just get it transfer to another plan. Problem solved.
2007-12-08 08:17:26 · answer #10 · answered by Gary 5 · 0⤊ 0⤋