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  1. #1
    jinuj Guest

    Withdrawal from 401K

    I work for a US corporation. If I leave the company in January, do not take up a job for the rest of the year and decide to cash out the monies in 401K will I be taxed for the amount upfront or will it just be added to the annual income for 2002 filing? I understand that there will be the penalty for early withdrawal(10%). If the 401K amount gets added to the annual income, I might not pay much tax since the annual income becomes just the 401K amount + January salary.

  2. #2
    Join Date
    Nov 2000
    The 401(k) administrator will withhold 20% of your withdrawal for Federal income tax. When you file your 2002 tax return, the entire withdrawal amount will taxable income. The 10% penalty will be added to your total tax liability. Subtract the withheld amount (same as payroll withholding) and you either owe or receive a refund.

  3. #3
    jinuj Guest

    Thank you, Shycat

    Thank you, Shycat

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