Early Withdrawal

Archive for February, 2010

Early Withdrawal Penalty Tsp

February 14th, 2010

Question: Can I (Could I) file for the 401k withdrawal separately from regular taxes?

Last year we ran into some financial problems and had no other option but to do an Early Withdrawal from our 401k (TSP). We did get the normal 10% penalty but no taxes were withheld. Now we are a bracket up and the amount of taxes due is completely out of my reach. Which I don’t really get, I make a financial hardship withdraw and it doesn’t get taxed at the time of withdraw so that I can be taxed at a higher rate? Not fair. Anyways, I was wondering if there was any possible way to tax the withdraw by itself (I’ve read in different places it’s 20%) and save approx. $4,000.00? Thanks.

Answer: The tax owed on it would depend on your current income tax bracket.

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