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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55143
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I have $600,000+ 401k retirement account. I am about to pull

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I have $600,000+ 401k retirement account. I am about to pull out $200,000 to buy a retirement condo. I receive a monthly annuity about $2,000 per month. I will be 59 1/2 whenI take this money out. What kind of taxes I am looking at for tax year 2013? I do not want a mortgage. I want to pay for the condo cash. However I do not want end up paying 40,000 in federal, state and capital gains tax. In the 401k, 132,000 is cash, the rest is in Exxon Mobil stock

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Any withdrawal with be included in your taxable income. Since you will be 59.5, there will be no penalty for the withdrawal, but the full amount of the withdrawal will be taxed as ordinary income. So, it's likely that with state and federal income taxes, the tax impact would be around $40,000. I don't know your filing status or any other deductions you might have, but I've provided you the marginal tax brackets for 2012 below; it's not possible to give you the 2013 brackets yet because of the pending fiscal cliff Congress is debating:

<table border="0">Individual Tax Rate Schedules for 2012Filing StatusTaxable Income ($)Marginal Tax Bracket Rate (%)Married Filing Jointly0 to 17,4001017,401 to 70,7001570,701 to 142,70025142,701 to 217,45028217,451 to 388,35033388,350 and higher35Head of Household0 to 12,4001012,401 to 47,3501547,351 to 122,30025122,301 to 198,05028198,051 to 388,35033388,350 and higher35Single0 to 8,700108,701 to 35,3501535,351 to 85,6502585,651 to 178,65028178,651 to 388,35033388,350 and higher35Married Filing Separately0 to 8,700108,701 to 35,3501535,351 to 71,3502571,351 to 108,72528108,726 to 194,17533194,175 and higher


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