If my husband makes $130,000 and withdraws his 401(k), what tax percentage will be taken out?

If my husband makes $130,000 and withdraws his 401(k), what tax percentage will be taken out?

by Larry M. Carroll, CPA | Dec 04, 2017

If my husband makes $130,000 and he withdraws his 401(k), what is the tax percentage that will be taken when cashing it out? We know there's also a 10 percent penalty.

The question cannot be answered without additional details. Knowing the salary amount does not take into consideration itemized deductions and exemptions. As a general statement, I would withhold 30 percent—10 percent for the penalty and 20 percent for income tax. However, this may not be enough, considering the two open issues mentioned above.

Withdrawing an entire 401(k) can lead to difficulty in investing in the future for a number of reasons, and should be considered only as a last resort. I advise you to consider other options before withdrawing the 401(k).

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Larry M. Carroll, CPA, is individual practitioner with Larry M. Carroll CPA PC in Blue Bell, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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