Have a Tax Question? Ask a Tax Expert
Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.You are correct about the 10% penalty. If you are under 59 1/2 you will have an additional 10% penalty on the withdrawal.The rollover information is correct too. You have 60 days to rollover the total amount (this includes any tax withheld).It is when you get down to the contributions to your 401K that you get a little off track.
If you are looking to have your 401K contributions made through your employment count as the rollover then no.
The 401K would really need to be a direct transfer unless your plan allows you to be the conduit. So you would need to check with the plan administrator
so, I'm under 59 1/2, so I would be looking at tax + 20% penalty then. What would the tax be?
You would be looking at tax plus a 10% penalty. The tax would be whatever your regular rate of income for tax is because the amount is simply added to your income for the tax year
I can get you the actual rates if you would like
Yes please on the tax. How is it only 10%? You said "If you are under 59 1/2 you will have an additional 10% penalty"
did you mean 10% additional to the tax or 10% on top of first 10%
The additional part is the tax and the additional penalty but the penalty is just 10%
10% on top of regular taxc
Great. I assume those are federal taxes. is there state tax due too?
Federal that is correct.
I will see for Illinois
Illinois has a flat income tax rate which applies to both single and joint filers. The Federal Income Tax, in contrast to the Illinois income tax, has multiple tax brackets with varied bracket width for single or joint filers. 5%
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