Any Ideas On How To Withdraw Your 401k Without Penalty?
- Thread starter Silkk
- Start date
Roll your 401k into an IRA. You can use the money for various things from tuition to buying/improving your first home. For the most part though, you're pretty limited.
Do you have a new job lined up? I think you can transfer it to another 401k. Talk to employee relations or profit sharing or whoever handles that type of thing. Some companies you have to be there a certain number of years to get all the money they contribute, mine is 5 years. But the money you've put in is yours regardless. There's enough fees already. Transfer it somewhere where you ain't paying no 20% penalty. That's not worth it.
Need to withdraw it so i can move to houston
Domingo Halliburton
Handmade in USA
withdraw it, change your name and move to another state...
Yapdatfool
Superstar
There is no legal way to do it w/out paying a penalty. Best you can do is try to get the majority of that 20% back in next years income tax refund.
Camile.Bidan
Banned
that 20% penalty doesn't include the income tax. Meaning...
If your marginal rate is 20%, and you withdrew 10,000, Obama will charge 20% on the 10000.
So you will get charged a 20% penalty, and then a 20% income tax for a total of 4000.
4000/10000= 40%
You might as well just use a credit card if times are really that tough.
If your marginal rate is 20%, and you withdrew 10,000, Obama will charge 20% on the 10000.
So you will get charged a 20% penalty, and then a 20% income tax for a total of 4000.
4000/10000= 40%
You might as well just use a credit card if times are really that tough.
Withdrawal amount
Taxable amount
Federal tax withholding (20.0%)
State tax withholding (LA 0.0%)
All id have to pay is the 20% tax fee
Camile.Bidan
Banned
See, you don't even know what you're talking about, and you want to withdrawal money. I mean please RESEARCH. Before you make major money decision? Go talk to a CPA or a tax laywer. I am a CPA BTW.
There is a penalty of 10% (sorry that I said 20% before)
The withholding is what the institution that gives you the money will withdrawal on you're behalf and send to Uncle Sam. That may or may not be the money that you will ultimately owe.
This is what will happen guy.
Say you make 60K this year in wages... and you had 20K in your 401K
Now please pay attention to this.
Your income for the year (in the eyes of the state and the federal government) will be 80K (wages plus that withdrawal)
You will have an AGI of 80k.
You have a taxable income of (AGI - deductions) of 69,850 and now your Marginal Tax rate is 25%. You will owe the federal government
13,318.75, and you will still owe the State government taxes on the 401k withdrawal as it is also considered income.
you just paid .25 in taxes on the withdrawal + states taxes of (whatever that state tax rate is...lets say it's .09%) and then you have to pay a 10% early withdrawal penalty.
that's .44%.
Let's not forget that your monthly tax withdrawals probably won't be enough to pay for taxes at a higher marginal income rate/level. So you will owe money to uncle come 2014.
Go get a credit card bro. It's a lot cheaper than what you're trying to do.
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The title of the thread says "Withdraw your 401k".
Camile.Bidan
Banned
That's what I'm talking about. You didn't fully research what you're about to do. the 20% withholding is not the actually penalty nor is it the actual tax liability. The penalty is 10%. you will still owe Federal and State taxes on that money, when your tax bill comes.
I did a simple calculation simulating the tax treatment of 401k withdrawal. You have chosen have chosen to ignore. I will say no more.
