Have a Tax Question? Ask a Tax Expert
Basically correct yes. There is an exception to the penalty and taxation on the distribution if you recontribute the cash received into another qualified plan or back into the original 401K account. See below.
Rollovers from a 401(k) plan. A rollover occurs when the participant receives a distribution of cash or other assets from one qualified retirement plan and contributes all or part of the distribution within 60 days to another qualified retirement plan or traditional IRA. This transaction is not taxable but it is reportable on Form 1099-R and the participant's federal tax return. A participant can roll over most distributions except for:
Any taxable amount that is not rolled over must be included in income in the year received. If the distribution is paid to the participant, he or she has 60 days from the date received to roll it over. Any taxable distribution paid to a participant that is eligible for rollover is subject to mandatory withholding of 20%, even if the participant indicates that he or she intends to roll the distribution over later. If the participant is under age 59 ½ at the time of the distribution, any taxable portion not rolled over may be subject to a 10% additional tax on early distributions (described below).
See link here for additional information - http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Resource-Guide---Plan-Sponsors---General-Distribution-Rules
The money I withdraw is th pay my credit card. After 1 month, I have money to pay it back. Does this means I don't have to pay penalty and income tax?
Yes this is correct. If you withdraw with the intent to rollover to another account you have sixty days to do it or return the funds to the original account.
If you withdraw funds from your 401K with the intent of spending it then it would be taxable and the penalty would apply if you are over 59 1/2.
Your intended use of the funds is the driving factor to determine if there is a taxation event. If you can prove that you intended to rollover the funds to another account I believe you are in the clear (i.e. not taxable) but if you can't prove that intent then unfortunately the penalty and tax will apply.