Withdrawing 401k funds

[Jackman85]

What is the name of your state (only U.S. law)?
Utah

I am withdrawing my 401k balance early because i left the company and need the money. I have aquired the proper forms from the adminstrator at the company and it has a spot to declare how much state tax i want withheld. I need to know what percentage i need to withhold for UT to avoid later trouble with taxes. Any insite to this problem would be greatly appreciated. Also how much is going to be taken by the Federals Gov for taxes and or fees

Thank you,
Ryan

 

[Antigone*]

What is the name of your state (only U.S. law)?
Utah

I am withdrawing my 401k balance early because i left the company and need the money. I have aquired the proper forms from the adminstrator at the company and it has a spot to declare how much state tax i want withheld. I need to know what percentage i need to withhold for UT to avoid later trouble with taxes. Any insite to this problem would be greatly appreciated. Also how much is going to be taken by the Federals Gov for taxes and or fees

Thank you,
Ryan

We can't tell you how much to have withheld. We don't know your personal financial situation.

You will be subject to a 10% additional tax for the early withdrawal from you 401(k). You will then be subject to income taxes on the money being withdrawn.

So let's say you are withdrawing $10,000. You will have to pay penalty of $1,000 for the early withdrawal and then you are subject to income taxes on the $10,000 at your Federal income tax rate.

What reasons do you "need the money for?"

 

[Jackman85]

To pay my bills till i find new employment. So if i find out what utah state income tax rate is then i should put that as the amount for Utah to withold to avoid owing taxes later?

 

[Antigone*]

To pay my bills till i find new employment. So if i find out what utah state income tax rate is then i should put that as the amount for Utah to withold to avoid owing taxes later?

That sounds logical to me.

 

[Jackman85]

To me also. Just wanted to make sure. Also I assume federal tax will be automaticly taken since there is no spot on the form regarding it. Am i right in assuming this?

 

[Country Living]

You need to ask your plan administrator what they withhold up front - probably 20%. Then you'll have to declare the 10% penalty when you file your income tax. Depending on your tax bracket - the 20% might not be enough so you'll have to adjust your plan to accommodate the possibility of paying when it comes time to file.

I don't know all the new rules about not paying the penalty in certain circumstances - you'll have to wait for the tax folks to wander by.

 

[LdiJ]

What is the name of your state (only U.S. law)?
Utah

I am withdrawing my 401k balance early because i left the company and need the money. I have aquired the proper forms from the adminstrator at the company and it has a spot to declare how much state tax i want withheld. I need to know what percentage i need to withhold for UT to avoid later trouble with taxes. Any insite to this problem would be greatly appreciated. Also how much is going to be taken by the Federals Gov for taxes and or fees

Thank you,
Ryan

The plan administrator will not automatically withhold the necessary amount of federal taxes. They will withhold at least 10% but that may not be anywhere near enough.

You need to figure out what your marginal federal tax rate was for 2008, and have that plus the 10% additional tax withheld. So, if your marginal tax rate was 15%, you would need a total of 25% withheld. If your marginal tax rate was 25%, then you will need a total of 35% withheld.

As far as state tax is concerned, you need to find out what your state tax rate is, and have that amount withheld.