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I retired at 55 and left money in my 401K to take advantage of penalty free withdrawals. The withdrawals come first from the company stock I have in the 401K. My question is can I use the cost basic of the company stock and subtract it from the amount withdrawn or do I need to use the total amount withdrawn as income to calulate the amount of tax I pay.

It depends on how you take it and what you do with it. Before you do anything, take the time to read up on Employer Stock in Publication 575, paying special attention to the discussion on Net Unrealized Appreciation.

Phil Marti
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