401k withdrawal
I am presently 65 and would like to withdraw $20,000 from my 401k. The company has informed me that there will be a 20% federal tax, is there anyway around this
Couldn’t answer that. 20,000 would be quite a trip, and you would need to request a distribution of 25,000 to net 20,000 after the withholding.
Permalink Submitted by Alan - IRA critic on Sun, 2018-01-28 16:28
The 20% withholding is mandatory per IRS rules. This is a deposit toward your actual tax liability for 2018, so you will not pay more than you would have, but will pay it sooner. You could offset it by reducing your withholding from other sources or reducing your quarterly estimates if you pay that way. If you are retired, and in many cases if you are not, if you do a direct rollover to an IRA, you can then take the distribution out of the IRA right away and decline withholding. IRAs do not have mandatory withholding on distributions.
Permalink Submitted by Carlos Freire on Sun, 2018-01-28 18:48
Thank you Alan, I am still employed and still contributing to my 401k. I just wnated to take a trip with the grandkids.Does this make sense?