| “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 ½ 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.
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