Question: 401K Early Withdrawal Penalty?
Okay, I need an answer from someone who KNOWS FOR SURE about this rule. I already withdrew my 401k when I left my employer this year. I am filing taxes, well my accountant is. The plan holder took out 20% for Fed tax. Some people say this may be enough to cover the penalty , or may not be enough. What does this may/may not stuff mean? Dont they take out 20%, then tax you another 10% of the original principal amount? Example: I have 10,000 in 401k , get 2,000 withheld from fed tax upfront, then get another 1,000 (10% of 10,000) in April for a total of 30% of the original amount? Or am I misunderstand this rule?
Answer: You will owe income tax at your highest marginal rate plus 10% of the withdrawal.
When Can I Make Withdrawals From My 401k?