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401 K Withdraw Question?


I am UNDER 59.5 years old.
I left a job that matched my 401 K contributions.

I have decided to withdraw the portion that was matched to me (yet I have left the portions that I have contributed untouched). The money was not rolled over into a new investment.

I was surprised to see the electronic statement sent to my banking account was indeed the full amount and no taxes were with withheld.

The withdraw was based on cashing out on company stock (the matching contributions).

What should I expect to owe in terms of taxes this year for this transaction? I was assuming this would be a 20% and I thought this would have been withheld... is this money, as matched funds from the investment, taxed differently?

more info: The account lists my 401 k contributions separate from the employer matched funds. Had the portioned I withdrew been from the funds I contributed they would have withheld. However they didn't withhold the portion they matched- is it possible these funds are taxed differently?

They should have withheld 20% but your tax and penalty will be more than that. You will be taxed at your marginal rate plus a 10% penalty and if you have state income tax you may have that and a penalty. You have 60 days to roll it into a IRA so roll it all in to avoid major problems.
If you left your job and are over 55 you could avoid the penalty.
It is about the worst way to get money since you may be giving between 35-50% to the government.
The part they put in is exactly like the part you put in for taxes.

When you get your 1099R at the end of the year. Check the distribution code. There is an explanation of the codes on the back of the form. If the code is "early distribution" then you can expect to pay an 10% penalty to the IRS - in addtion to paying your tax bracket on the income. It is treated sort of like pension income - it's taxed much the same way as wages.
You can avoid the penalty if you meet certain exceptions: like paying for your first home.

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