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Category: Finance
Satisfied Customers: 4625
Experience:  Tax professional and business consultant for 35 years.
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I am having to complete a 401k withdrawal reasons.

Customer Question

I am having to complete a 401k withdrawal for medical reasons. With the withdrawal, I will be in the 28% tax bracket. Considering the 10% penalty, I was planning to withhold 38% federal and 3.75% state (Illinois). Does that sound correct from the withholding perspective?
Submitted: 2 years ago.
Category: Finance
Expert:  PDtax replied 2 years ago.
Welcome to the site. I'mCustomer and will be helping you today.
If you can itemize, the benefit of the state tax would reduce the federal rate, and hardship medical withdrawals escape the 10% penalty and are itemized deductions if you exceed the floor.
I think you could save 10% for the penalty, and still be slightly overpaid with the withholdings you plan.
Thanks for asking at just answer. Positive feedback is appreciated. I'mCustomer
Customer: replied 2 years ago.
Will the fact that the expenses are medical allow me to write it iff tio?
Expert:  PDtax replied 2 years ago.
Yes, the medical you are paying with these funds would be a medical itemized deduction.
That's why the 28% plus the 3.5% will likely be slightly in excess of what you need.
Expert:  PDtax replied 2 years ago.
Please advise if you need anything further.
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