What taxes will I have to pay on a 401K payout?

Answer by  timeismoney (994)

You will pay income taxes on this payout in the amount of your income tax bracket which is determined by your gross income after considering all sources. You paid no taxes on the accumulation of the 401K (interests and dividends as it grew) and you reduced your taxable income by deposits into it while you worked. Distributions are taxed.

Answer by  tamarawilhite (17883)

If you are below retirement age, you will pay your current income tax rate AND an additional 10% penalty. At the 25% tax bracket, you would then pay 35%. If of retirement age, you will only pay income tax rates.