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Author: MKInvesting Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25265  
Subject: 401k penalty? Date: 11/13/2000 4:28 PM
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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
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