401k question.

[q011519]

If I were to take out my 401k early, generally how much of a % would I be sacrificing as a penalty for doing so? 40 - 50%? (I'm would never do it, just curious on how much gets withheld)

 

[Turin39789]

97.5

 

[spidey07]

Taxed as normal income, plus 10% penalty.

 

[Apple Of Sodom]

If I were to take out my 401k early, generally how much of a % would I be sacrificing as a penalty for doing so? 40 - 50%? (I'm would never do it, just curious on how much gets withheld)

A different opportunity exists: you can borrow the money from yourself (depending on who holds your 401(k) of course, but most companies allow it.) You can borrow up to 50% with no penalties and you pay yourself back with interest to yourself. The only downside is that your money isn't making you any money while it is in your pocket and not in your account.

 

[Blackjack200]

A different opportunity exists: you can borrow the money from yourself (depending on who holds your 401(k) of course, but most companies allow it.) You can borrow up to 50% with no penalties and you pay yourself back with interest to yourself. The only downside is that your money isn't making you any money while it is in your pocket and not in your account.

I think you can also pull it out w/o penalty for certain qualified reasons; like down payment on a house or medical expenses.

 

[Homerboy]

Taxed as normal income, plus 10% penalty.

Ding!
I just had to do it
Whats is "nice" though is that they can at least pull the taxes out too for you so that you're not hit with it come Jan 1st.

 

[q011519]

Would I take into account State Income Tax as well as Federal? (I live in Tex so no State tax, correct?)

 

[EagleKeeper]

Would I take into account State Income Tax as well as Federal? (I live in Tex so no State tax, correct?)

It shows up as additional income - so your state income tax will apply at the end of the tax year

 

[DT4K]

If you take an early withdrawal, they will generally take around 40% out for tax withholding. Then when you file your taxes, depending on your tax rate, you may get some of that back.

So if you take 10000 out of a 401k, you will probably get a check for about 6000.

 

[edro]

If you take an early withdrawal, they will generally take around 40% out for tax withholding. Then when you file your taxes, depending on your tax rate, you may get some of that back.

So if you take 10000 out of a 401k, you will probably get a check for about 6000.

Yeah, Vanguard automatically withholds 40%.
It's probably a fraud deterrent, so you don't move to Mexico after you withdraw.

 

[Merithynos]

I think you can also pull it out w/o penalty for certain qualified reasons; like down payment on a house or medical expenses.

Hardship withdrawals still incur the 10% early withdrawal penalty.

 

[KIAman]

A different opportunity exists: you can borrow the money from yourself (depending on who holds your 401(k) of course, but most companies allow it.) You can borrow up to 50% with no penalties and you pay yourself back with interest to yourself. The only downside is that your money isn't making you any money while it is in your pocket and not in your account.

That's not the only downside from borrowing. The other is you are paying back yourself into your tax free account using... taxed income. So essentially you are paying double tax. One from income tax and the other paying back using post taxed income.

 

[sactwnguy]

I live in Tx and I took 16k out of my 401k for a family medical emergency, they automatically withheld 20% and I had to pay an additional 10% when I filed my taxes.