Need Tax advice please

[wildbill1962]

I am hoping that someone can help me with some tax advice.
I have changed jobs, and had a 401k with the old company. I know that I should roll it over, but really need to pay some medical bills etc. So need to cash out. I know since I am not 59 1/2 I will have to pay the 10% penelty. I will also have to pay the taxes, but not sure what % I need to tell them to withold. I dont want a big hit at the end of the year when I do my taxes.
If someone can help, please PM me and I can give you the amount etc.

Great big "Thank You" for your help.

Bill

[arwhite]

I'm no expert by any means, but you might be able to take a loan from the 401k or even get a hardship withdrawal that might let you avoid some of the taxes or penalties. As always, consult a local professional (CPA, attorney, etc) for actual actionable advice.

[TBman]

Originally Posted by arwhite

I'm no expert by any means, but you might be able to take a loan from the 401k or even get a hardship withdrawal that might let you avoid some of the taxes or penalties. As always, consult a local professional (CPA, attorney, etc) for actual actionable advice.

^Best advice. It depends on your plan. Talk to your HR department to start the ball rolling.

If you choose the hardship withdrawal subject to tax and can't really afford a CPA, see if you can get a copy of Turbo Tax, and put last years return into it. Check to make sure the return is correct.

Put in an estimated tax payment if necessary to zero it out to no tax due or cut your withholding on your W2 by the refund amount if there was one. (You want a return projection that starts with no tax due or refund without adjusting the income and deductions at this point)

Then do a 1099-R with the amount that you are withdrawing and code it #2 (early distribution, exception applies) .

Then add to schedule A the medical expenses that you are paying with the money you took out from your 401(k) in addition to any others you paid or expect to pay in 2017.

This all assumes that your 2017 income and other deductions, if any, will be in line with your 2016 income and deductions.

This will give you a ball park figure for the federal.

I'm not dealing with state return because this method can be a pain for some states, just get your tax rate off the return (total tax divided by taxable income) and do the math on the withdrawal. Not perfect but its usable. Pad the tax due if you feel better about it,

If you decide a CPA would be better then bring a copy of last year's (2016) federal and state returns with you. Good luck. Generally, asking for tax advice on a guitar forum is a bad idea though,

[dragon1952]

That 401K is your future. If there is any other possible way around this you should explore it. Even bankruptcy, as drastic as that sounds.

[Gmountain]

My advice- don't seek legal, medical or financial advice from internet forums. Talk face to face with a professional.

[Mr. Jelly]

Don't touch your 401K! I'm sixty four and have seen numerous friends and acquaintances that had successful lives and careers end up trying to live on $2,500 a month, not able to retire and not able to continue their job or profession. Being old and worn out, not feeling well and having to work is not a future you want. If you have to fill bankruptcy. You'll be better off in the long run.

[amyFB]

Originally Posted by wildbill1962

I am hoping that someone can help me with some tax advice.
I have changed jobs, and had a 401k with the old company. I know that I should roll it over, but really need to pay some medical bills etc. So need to cash out. I know since I am not 59 1/2 I will have to pay the 10% penelty. I will also have to pay the taxes, but not sure what % I need to tell them to withold. I dont want a big hit at the end of the year when I do my taxes.
If someone can help, please PM me and I can give you the amount etc.

Great big "Thank You" for your help.

Bill

I will emphatically second the advice to avoid if possible any use of the 401k to pay medical bills. Push the medical providers to work out a payment plan that fits in your budget.

Probably you already know: The primary point of 401k is that you'll withdraw the cash when your tax rate is a lot lower than now while you're employed.

A premature withdrawal will be hit with the 10% penalty and whatever your current tax rate is.

Do you have any chance to take a low interest home equity loan instead?

best of luck with whatever you decide.

[wildbill1962]

Thanks to everyone for the great advice and sharing your wisdom !

One of our great members talked with me via PM and really went above and beyond to help. Thank you