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iguesswhatevs OP t1_jad5r3r wrote

Reply to comment by nothlit in Just got my check from former employer closing my 401k account by iguesswhatevs

Wait so I’m being taxed on the 20% that has already been taxed?? I don’t understand that. The 21% is just federal taxes withheld from me

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nothlit t1_jad701d wrote

If you are under age 59.5, any money that leaves a retirement account and does not enter another retirement account is subject to the 10% early withdrawal penalty.

Withholding is just a prepaid estimate of tax. Your actual tax may be higher or lower, depending on other factors.

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iguesswhatevs OP t1_jad7e8c wrote

So what you’re saying is that 21% federal income tax PLUS 10% withdrawal fee?

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nothlit t1_jad8c8k wrote

You would pay 10% additional tax on the amount that was withheld and not rolled over

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