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Hello,Where an employee separates from an employer and receives a distribution from a 401(k), and the employee is at least 55 years of age, there is no 10% additional tax penalty.A 401(k) distribution is, however, subject to tax at ordinary income rates. A typical person has an effective annual tax rate of about 18%. The fact that you work overseas means that you may be entitled to use the foreign earned income tax exemption to reduce your tax liability for the tax year. However, a qualified employer plan, such as a 401(k) is required to withhold 20% of the distribution, regardless of the employee's circumstances. Because of this requirement, a 22% withholding from your distribution seems about right. You may ultimately get some of that back when you file your return at year end. Hope this helps.