Have a Tax Question? Ask a Tax Expert
Yes, the amount that you withdrew WILL be added to you taxable income for the year (you'll get a 1099-R)
HOWEVER, the withholding that you had done (the 20%) will go against that - Works just like your W-2; WHatever you withheld will offset the tax
DO remember that if you're under age 59 and 1/2 (or under age 55 if you left the company sometime after TURNING 55) there will be an additional 10% penalty tax on the amount withdrawn
SO lets say that your other income for 2013 will be 50,000 and you withdrew 10,000 from the 401(k) ... you'll be reporting 60,000 of taxable income ... BUT the 20% that was withheld will offset (maybe more maybe less) the tax on that additional income
Then the only other piece is (if you are under the retirement age) there will be an additional 1000 of tax (the 10% penalty on that 10,000).
So depending on your TOTAL situation, the amount withheld may be well over the additional tax and create an refund ... if the 20% WASN'T enough to cover the tax (and any tax penalty than might be there because if age) .. then you might have to pay a little more, come tax time.
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Please let me know if you have any questions at all ...
OR set me up as your preferred expert on your home page.
Regardless, thanks again,