Have a Tax Question? Ask a Tax Expert
Q: If Im at 80K income now, plus the withdrawal of 16K, will that mean that i will get hit for higher taxes on the 80k since it will bump me into the 28% tax bracket?
A: As the distributed amount is added to ordinary income, the 16k will put you in the 28% tax bracket, and as you stated, you are going to get hit with the early withdrawal penalty as well, unless you meet an exception. There are exceptions that can exempt taxpayers to the 10% early withdrawal penalty. What type of retirement vehicle did you make the withdrawal from?
Sorry, but yes, regarding the 28% tax bracket if you file single, and if you don't meet an exception, the additional 10% penalty as well.
If you meet any of the exceptions shown on the page at the following link (Yes--under the 401k), you will not have to pay the 10% early withdrawal penalty. If you do meet an exception, you will need to complete Form 5329 to show that you qualify for an exception.
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