Any Tax professionals here?

[VIKING]

Not sure about now but years ago the 10% penalty was dropped if it was for certain things..Down payment on your first home was one of them..

 

[perfor8]

Since your question has been answered, May I hijack this thread?

My wife and I pulled out her 401K which wasn't a lot, to put down on a house we are building.

the financial institution it was with held out the supposed "taxes" on the total and deposited what was left to us.

to start with it was $31k and some change they took out 20% for federal =$6,209.00. and then about $1552 for state. leaving $23,387.00.

I know there is the 10% penalty also. that I will need to pay on next years taxes. is that state and federal? and is it on the original gross amount? What I'm trying to figure out is how much of the remaining $23,387.00 do I need to hold out for the penalty.

thanks for any help peeps.

10% should already be taken out, and it's on the gross amount.

 

[tranger2]

10% will not be withheld generally, you will pay it when you file next year's return. You need to review the regs to see if it can be waived if being used for a residence....

 

[CHenry]

Only 10000 can be borrowed from 401k with no penalty.

 

[dubs chops]

Thanks guys, I will get with my tax dude to let him know it will be going down against the house!

 

[turkeyrun]

The 20% will be withheld. The IRS 10% penalty will be paid with your return. Approx $3200.

 

[Oklahomabassin]

Dub chops
Would you pull the 401k again, knowing it would be taxed/penalized nearly 35%?

 

[CHenry]

Dub chops
Would you pull the 401k again, knowing it would be taxed/penalized nearly 35%?

That's a big hit!

 

[rhodesbe]

The 20% will be withheld. The IRS 10% penalty will be paid with your return. Approx $3200.

You sure it isn't 10% withheld and then 20% with your return? I'm not 100% on that, but I've heard family explain they were surprised they had to pay regular income tax on an early withdrawl in addition to the penalty they had held out up front.

 

[tranger2]

20% is withheld and 10% is assessed at the time the return is filed.