Welcome Guest. Register Now!  



Find a tax professional cpa near you

Reply
 
LinkBack Thread Tools Display Modes
  #1 (permalink)  
Old 01-18-2013, 01:57 PM
Junior Member
 
Join Date: Jan 2013
Posts: 1
How much tax will I pay for 401K withdrawal

Hello there!

A previous employer sent me a check from my 401K because they said they never heard back from me as to what I wanted to do with my 401K. So they mailed me a check back in 2011 for $642 and at that time I was financially strapped for cash so I deposited the check to my checking account. I realized I would have to pay taxes on it. I totally forgot I had cashed that check when I sent in my 2012 tax returns. I just realized it recently after sorting thru some papers. So now I will have to claim that check on this year's return.

I would like to find out how much taxes will I have to pay for that 401K? Can the taxes be taken out of any refunds that I may get? I also live in CA if that helps.

I hope to hear from someone soon. Thank you very much.


Chip



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-18-2013, 04:43 PM
Moderator
 
Join Date: Oct 2010
Posts: 2,544
I would like to find out how much taxes will I have to pay for that 401K? Can the taxes be taken out of any refunds that I may get?======> Generally, if you are under 59 years old early withdrawals from a 401K are tax penalized. There are two payment components for early withdrawal:

The first one is the tax bill on the distribution's income for federal and state. The second is the tax penalty required by most plans.You need to determine your federal income tax rate to calculate 401K early withdrawal tax due. The total amount of the distribution you take out is taxed at your federal tax rate. For example taking out $10K from your plan will leave you with a tax bill of $2.8K if your rate is 28%, assuming that the distribution is all income.You also need to estimate your State income tax bill on the 401K withdrawal. If your state income tax rate is 8%, you will owe $800.00 ;$10K*8%,to the state on the $10K distribution, assuming all is income again.You ALSO need to calculate 401k early withdrawal penalty. IRS rules generally require that the plan charge a 10% tax penalty for early withdrawal, unless you qualify for an exception. This is in addition to the income tax due for early withdrawal. In our example this penalty is equal to $1K.And you are subject to failure to pay tax penalty; The failure to pay penalty is 0.5 percent of the tax owed for as long as the tax remains unpaid. Interest will also be charged on the overdue tax amount. If nonpayment is due to understating the amount of tax due on your return, you could be assessed a penalty of 20 percent. This penalty kicks in when you understate the tax by more than 10 percent on your return. If you cannot pay all of the tax at one time, then you can set up an installment agreement with the IRS. The agreement would allow you make monthly payments on the tax until the tax is paid in full. You may complete IRS form 9465 ; I guess you need tocontact the IRS/ DEpt of Rev of your sttae for more info in detail.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 01-25-2013, 01:14 AM
Junior Member
 
Join Date: Jan 2013
Posts: 13
I have same question over here. I think you must consult with tax consultant.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Ira Withdrawal cbj55 IRA/Sep 1 02-27-2009 12:02 PM
401K help Please! daisy1950 IRA/Sep 5 01-30-2009 09:27 PM
IRA withdrawal penalty for account Beneficiary Chubba17 IRA/Sep 0 11-13-2008 06:31 PM
Roth IRA Withdrawal and Penalty lwebinc IRA/Sep 1 07-14-2008 12:22 PM
How one can avoid the 10% penalty for early withdrawal of funds from an IRA? gimini IRA/Sep 2 04-08-2007 11:36 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning