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

Dec 04, 2017
askacpaicon

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.

Pennsylvania CPA Journal

Read the latest from the Pennsylvania CPA Journal online or via the mobile app and digital edition.

Read More

CPA Now

Get the latest info on professional trends, management, and leadership skills on CPA Now.

Read More

Premier Sponsors

Platinum Sponsors

Gallagher Bollinger Logo
CPACharge


Silver Sponsors

Paychex logo
Capstan Logo
epsa USA


Bronze Sponsors

sage-logo_bright_green_rgb_2018_28469
TaxConnex_logo_TM_tagline2019
botkeeper1
Fox School of Business, Temple University


Interested in becoming a sponsor? View packages >