401k penalties?

Generally, if you are under 59 ½ years old early withdrawals from a 401K are tax penalized at 10 % There are exceptions to these rules; the "Plan" may allow some types of early distributions with no penalties.early withdrawal tax due. The total amount of the distribution you take out is taxed at your federal tax rate. For example taking out $6,000 from your plan will leave you with a tax bill of $600 if your rate is 10%, assuming that the distribution is all income.

Consider other options to early 401K withdrawals. Because the taxes and the penalties can be high depending on the amount of the withdrawal and on your tax rates, consider taking a 401k loan instead. Loans are given at very favorable interest rates and the interest goes into your 401k account.. Taking out monies to put a down payment on your primary home are usually tax free in most states .

You should also be aware that millions of folks do not agree with 401 K programs . The accumulation of 401 K funds are usually your own monies to begin with . Employers only match low income personel . They can lose your money faster than earn for you and who's to say you will be able to Hear, See, Walk, Talk, Travel, etc to enjoy those savings when you are 65 yrs old. You just may be saving all that to pay for some Doctor's new Corvette .

The penalty is 10% for those under 59 1/2 generally, but that is not all you would pay whatever you Federal & State Income tax rate would be. I live in Georgia so that would be a 6% state tax rate. The federal tax rate would most likely be at least 15% but could be higher depending on your income. I would say the best case scenario would 15%(federal) + 10%(federal penalty) + 6%(if you live in Georgia, much higher is you live in California or New York) for a total of 31%, this is your best case, could be closer to 40%.

If you live in Florida or Texas no state income tax!!!

The correct answer is that, assuming you are either separated from service or your employer permits in service distributions, the amount you would receive would be subject to a 20% federal tax withholding unless you set up the distribution as a periodic payment + any state tax withholding. So you would only receive $4,800 - any state withholding. If you are not 59 1/2 you are required to pay an excise tax (i.e. penalty) of 10% of the gross amount ($600) when you file your taxes for the year. It is not worth it.

If you are still employed by the company, it's unlikely the plan allows for withdrawals.

If you are no longer with the company = 10% penalty and standard income tax.

You need to do a dummy tax return with and without the 401K money (and the 10% penalty).