Withdraw Pension

[guagsh]

What is the name of your state (only U.S. law)? Nevada/Hawaii

I am withdrawing my pension out of my union in Hawaii because I moved to Las Vegas. Since than I have not worked for the union and I have lost 5k. I would like to take it out lump sum, however I know that I have to withhold a minimum of 20% federal tax and 10% early penalty. I do not want to roll it over and I do not want to have to owe taxes later. Is 20% sufficient to have withheld or should I increase this amount to maybe 30%? Any information will be appreciated. I need to meet a deadline by March 31.

[LdiJ]

Originally Posted by guagsh

What is the name of your state (only U.S. law)? Nevada/Hawaii

I am withdrawing my pension out of my union in Hawaii because I moved to Las Vegas. Since than I have not worked for the union and I have lost 5k. I would like to take it out lump sum, however I know that I have to withhold a minimum of 20% federal tax and 10% early penalty. I do not want to roll it over and I do not want to have to owe taxes later. Is 20% sufficient to have withheld or should I increase this amount to maybe 30%? Any information will be appreciated. I need to meet a deadline by March 31.

It depends on your marginal tax rate, your age, and any other factors that might give you an exception from the 10% penalty for early withdrawal.

30% plus 10% for the penalty would likely be too much. Odds are that you are either in the 15% or the 25% marginal tax bracket.

[guagsh]

I am only 35yrs old and I make about 60-80k a year.

[anteater]

Originally Posted by guagsh

I am only 35yrs old and I make about 60-80k a year.

There are just too many factors to take into account to do this piecemeal on an internet discussion forum. There are a number of free calculators available that can get you into the ballpark for your estimated total tax liability for 2009. You can judge a good withholding amount from that.