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Robin, I drew down all of my 401K last year after I was

Customer Question
Hi Robin, I drew...

Hi Robin, I drew down all of my 401K last year after I was released due to a restructure of the company. My question is what tax rate will I owe for drawing it down and I just turned 59 in Jan.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Not at this time, thank you

Submitted: 13 days ago.Category: Tax
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2/6/2018
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 13 days ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,482
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name’s Lane.

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Bear with me just a moment.

I'm reviewing your question now and typing up my reply. I'll post that in just a few moments. Then, let me know if you have further questions on this.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 13 days ago

Becasue you are over age 55 (normally 59 and 1/,2 but there's a special rule for those that leave the employer after age 55) there is no additional early retirement penalty.

...

BUT, the amount withdrawn will simply be added to your other income for the tax year and be taxed at whatever tax bracket the additional income falls.

...

Here's the tax brackets for both single and Married filing jointly.

...

Single Filing Status

[Tax Rate Schedule X, Internal Revenue Code section 1(c)]

  • 10% on taxable income from $0 to $9,075, plus
  • 15% on taxable income over $9,075 to $36,900, plus
  • 25% on taxable income over $36,900 to 89,350, plus
  • 28% on taxable income over $89,350 to $186,350, plus
  • 33% on taxable income over $186,350 to $405,100, plus
  • 35% on taxable income over $405,100 to $406,750, plus
  • 39.6% on taxable income over $406,750.

Married Filing Jointly or Qualifying Widow(er) Filing Status

[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]

  • 10% on taxable income from $0 to $18,150, plus
  • 15% on taxable income over $18,150 to $73,800, plus
  • 25% on taxable income over $73,800 to $148,850, plus
  • 28% on taxable income over $148,850 to $226,850, plus
  • 33% on taxable income over $226,850 to $405,100, plus
  • 35% on taxable income over $405,100 to $457,600, plus
  • 39.6% on taxable income over $457,600.
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Customer reply replied 13 days ago
Thank you so much, would I be able to use Turbo Tax to file?
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 13 days ago

Yes, you can ... the program will ask you to enter the boxes off that 1099-R. (Including any withholding done, which will reduce the tax)

...

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work here.

Thanks,

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,482
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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