I am thinking of leaving my company. I have a 401k retirement plan
with them. My 401k consists of a ~29k pretax loan amount owed back (original loan was $35k taken in 2012), ~9k ROTH amount, and a ~$19k pretax amount. I am in a 25% tax
bracket. If I have this right, cashing out my 401k in full would result in a taxable event consisting of the ~29k pretax loan amount, the ~$19k pretax amount and whatever interest
was gained on the ~$9k ROTH amount being added to my 2013 adjusted gross income
at a tax rate
of 25% plus a 10% penalty for early withdrawal. To put numbers to this: Let's say there was no interest gained on the ROTH amount so then I would owe (~$29k pretax loan + ~$19k pretax amount) * 35% = ~$17k in tax on the combined pretax amount plus the loan distribution
. Therefore, if the company were to cash me out and send me a check it would be ~19k pretax + ~$9k ROTH = ~$28k total but to make sure I withhold enough in federal taxes
, the amount to withhold should be (~$29k pretax loan + ~$19k pretax amount) * 35% = ~$17k. Finally, I'd have (~$29k pretax loan + ~$19k pretax amount) added to my 2013 adjusted gross income and corresponding ~$17k withheld for 2013 taxes and a final cash out check to me of ~$11k. Does all that sound correct?