My retirement plan keeps 20% for taxes; if I withdraw my entire 401(k), will I get any extra funds when I file my federal income tax?

401(k), Income Tax
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December 2017
33% of people found this answer helpful

1. The general answer to your question is that you need to sit with a tax planner and review your specific situation. 

2. Whether you get the mandatory 20% withheld from withdrawing your entire 401(K) balance back is dependent on your entire tax scenario.  I would consider moving your 401(K) to an IRA first, then pull the funds out as you need them.  You might be able to avoid the mandatory 20% withholding this way.  If you use an advisor to do this make sure you seek a fee-only fiduciary and NOT a broker.

3. You third question is one of timing, based on your current and expected future income.  I am in a bit of a holding pattern as how to advise on this, we are on the cusp of a major tax overhaul that could impact when and how much you withdraw.  Again, I recommend you consider moving the money to an IRA first, then determine how much you will move out of a retirement account.

Daren Blonski

Enso Wealth Managment