early withdrawal of 401k

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L1: early withdrawal of 401kMy present income is $60k a year. We have $157k in a 401k that we need to withdraw to pay off debt. I did not contribute any money to this account, it was solely funded by my previous employer. I am 51 years old and I do not qualify for any hardship rules. How much will be left over after all taxes and penalties are taken out? I’m not looking for anyone to tell me not to do this, I just need to know how much we’ll have when it’s all over. I read that this can be claimed as unearned income and taxed at a lower rate is that true?Thanks.2010-01-05 17:04, By: wymi, IP: []
L2: early withdrawal of 401kBased on your post, I’m guessing that you have terminated employment with the employer that sponsored the 401(k) plan. If yes, then you can probably do what you want to do. If not,the plan probably prohibits in-service distributions.>>I read that this can be claimed as unearned income and taxed at a lower rate is that true?No. Take the$157,000 and add itto your $60,000 income for a totaltaxable amount of $217,000. You will be paying 10% of the $157,000 or $15,700 in penalties. If you assume a combined state and federal tax bracket of 30%, then take off another 30% of the $217,000 orabout $65,100 in income taxes for a total loss of around $80,000. The loss on the $157,000 would be about $62,800. For a quick and much more accurate estimate, get acopy of Turbo Tax, input all of you information and do the calculations.The numbers above a a pure guess since you didn’t give enough information. You should really talk to an accountant, or if you haven’t already, explore any other possible alternatives.2010-01-05 17:17, By: Gfw, IP: []