Do I have to pay taxes on my withdrawl?

You will get an IRS Form 1099-R and will owe tax at your normal rate plus an additional 10% if you are under 59 1/2 years old.

The tax that was withheld is the same as tax that is withheld from your pay. If it's enough to cover your tax liability you're OK. If not, you may owe at filing time.

You'll owe tax on the distribution as ordinary income, plus a 10% penalty if you were under age 59 1/2 at the time of the distro (or age 55 if you had 5 years with the company and no longer worked there). The 20% that is withheld for tax may or may not be enough to cover what you will owe. If you're very low income (about $18k if single) you may be OK but if you're in a 15% or higher tax bracket not enough tax would have been withheld.

If someone told you that you wouldn't have to pay any additional that the withholding, they might or might not have been right. They probably withheld 20%. The tax you'll owe is income tax at whatever your bracket is, plus a 10% penalty, so unless you are in a 10% or zero bracket, you'd owe additional tax.

You'll get a 1099-R form from them at the end of the year, and will need that to prepare your 2009 tax return.

This is income to you and if you heard you don't need to pay any more taxes, you heard wrong. You will get a 1099-R form.

It will be included as income and if you are not 55 in the year of separation from service, you get to pay an additional 10% penalty.

If you are in the 15% bracket, you are already 5% behind as the taxes withheld were 20%.

Helen, EA in PA

They withheld 20% as required by law. You will receive a 1099-R in January stating how much of the withdrawal is taxable (all of it) and if you didn't roll it over into an IRA or another 401k product, you will be taxed and penalized.

Have a nice day.