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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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California Pension early withdrawl TAX penalty

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I recently cashed out my pension fund in a lump sum from my previous employer. The amount was for $9900, and I was hit with a 20% federal withholding, but my employer did not withhold anything for CA state tax. Im not sure what the tax penalty would be for me, as I am nowhere near my retirement age (I am 28 yrs old). Can someone tell me what the tax percentage is that I will have to pay on my retirement/pension lump sum that I cashed out?

If I understand you correctly, you are asking for the California early distribution penalty.

The penalty for California is 2.5%.


Customer: replied 11 years ago.
Reply to Ed Johnson's Post: Hello Mr. Johnson,

Is it only 2.5%? Thats seems extremely conservative for a penalty on withdrawl from a pension plan before retirement - Are there some type of hidden taxes that I am not aware about - I was expecting to hear figures in the high 20's or 30's?

Also, if it is 2.5%, is that 2.5% on the $9900, or is that 2.5% on the $7920 that I will be receiving?

Rember, that the total Californin incomea tax is only a 9% variable rate. together with the 2.5%, the tax will be about 11.5%.

You will be paying 2.5% of the total withdrawal regardless of how much was taken out for federal.

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