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<<>>The income tax will be $11000 * your tax rate (in other words, both the penalty and the income tax are based on the total amount you withdraw). >>

Will the tax be computed against the full amount of $11,000, or $9,900 ($11,000 - $1,100) to account for the penalty?

BubblesUp had it right. The tax is on the full amount you withdraw - $11,000 in your case. There is no deduction for the early withdrawl penalty.>>

Exactly correct. Which is why (depending upon the tax laws in your state of residency), it's possible to pay MORE than 50% in taxes and penalties on the distribution. It could be VERY expensive.

I would almost rather borrow money from the "mob".

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