I'm 63 and still working. Will I have to pay taxes on what I withdraw from my 401(k)?

I'm 63 and still working. Will I have to pay taxes on what I withdraw from my 401(k)?

by Ibolya Balog, CPA | Mar 06, 2018

I’m 63 and still working. Can I use some of my 401(k) on my next home to defer some of the cost? Would I have to pay taxes on what I pull out?

Since you are over 59 years old, no early distribution penalty applies for taking an in-service distribution from the 401(k) account. However, the amount taken as a distribution is includible in taxable income in the year the distribution is made, regardless of the use of the money. So, yes, you will have to pay taxes on what is taken out of the plan.

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Answered by: Ibolya Balog, CPA, is an associate professor at Cedar Crest College in Allentown, 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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