What is a taxable lump-sum distribution?
If you take your 401(k) balance as a lump-sum distribution, you will owe income taxes on the full amount. No matter what your tax bracket, 20% of your distribution will be withheld for federal taxes. If you are younger than age 59½, you may have to pay a 10% early withdrawal penalty (see next question for more about this).
Related Questions
- Why did I receive Form 1099-R showing the distribution from my IRA/tax-qualified retirement plan as being taxable when I indirectly rolled it over to another eligible retirement plan?
- I received a lump-sum distribution from a retirement account, but no taxes were withheld. How do I determine whether estimated taxes should be paid?
- What is a taxable lump-sum distribution?
