Have a Tax Question? Ask a Tax Expert
Hi. Great Questions. Yes on the 10% penalty. Most 401k plans do withhold the taxes. The only way you could not withhold is to have the employer roll it over to an IRA at certain investment companies, such as Vanguard, which gives you the ability to not withhold. However, if you under-withhold, you may pay an under payment penalty on your taxes.
If you have any questions, let me know.