Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I am new to this board. This is probably an easy question, but I do need some help with it.

I want to remove money from an old 401k held with a previous employer, about $6,500, and pay off some debt.

I know there is a penalty of 10%, and I have to add the income into my yearly total for tax purposes.

The IRS told me I pay nothing, no 10%, until I see if I was going to end up paying income tax for the year.

If I was going to have to pay, then I should send in the 10% now.

But if I am not going to have to pay at the end of the year, just include the 10% charge on my tax return and recieve a smaller refund.

Can anybody tell me if this is true?

The account people at the company holding my 401k couldn't answer this, and the IRS gave me the instructions above. Who do I trust? This board looks like the best spot to get a final answer. MK
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.