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If one is 45 years old and one withdraws ones 401k balance in a lump-sum are there exceptions to the 10 percent penalty being assessed andor to the withholding of taxes?
There may be some very difficult and specific ones, that if you were in the circumstances for you would likely be addressing. Otherwise...do that thing that every fina…ncial advisor says you shouldn't...withdraw you tax preferred retirement savings...and you pay a penalty...and you receive it all as income too. By the way...you understand if your financial situation is desperate...that the 401k is exempt from seizure during a bankruptcy... withdraw it now and lose the protection too!
income tax withheld from each paycheck and sent to the state or federal gov't Employer deductions from employees' earnings to pay employees' taxes.
Withholding taxes are taxes that are subtracted from a payment by a third party before you receive the payment. Examples of this are: your employer takes taxes out of your pay…check before giving you your pay only only gives you what is left of your pay. Or a casino subtracts taxes from a jackpot you won and only gives you what is left. Non-withholding taxes are taxes you have to pay yourself directly to the government. Examples are a check you send with your Form 1040 or a payment you send when you get your real estate tax bill. Remember that withholding taxes do not represent the actual amount of tax you owe. They are just a crude estimate of what you actually owe. The actual amount owed is calculated when you fill out your Form 1040 at the end of the year. Most people do not properly fill out Form W-4 that they give to their employer and so pay much more withholding tax than they need to. Then at the end of the year when they fill out their Form 1040, they get a refund.
Not usually because you cannot act as judge in your own matters, which you would be doing by withholding. The appropriate action would be to render payment as agreed and… then file a lawsuit for the loss.
Yes, 2 separate things (accounts). The 401K investing doesn't affect the contribution amount allowed into the IRA. However, if you are contributing to a 401k, you are an …active participant in a retirement plan at work. If your modified Adjusted Gross Income exceeds a certain amount, there are limits on how much you may deduct for a contribution to a traditional IRA. You may still make a full non-deductible contribution, however.
It hasn't been determined yet by Congress. Curiously enough, it is "indexed to inflation". Since inflation has been negative lately, theoretically they could DECREASE the li…mits from 2009 limits ($16,500 in 2009) which would be terrible since so may folks have a lot of catching up to do.
The 415c limit is $49,000. This includes all pretax, aftertax, roth, catch up contributions, and employer match. There's not a maximum specifically for aftertax.
Is it legal for employer to withhold 401k contributions from check but not pay them in to your 401k?
Yes. When monies are deducted from your paycheck they are supposed to be sent to a trust company to protect them. The reason for the trust company to hold them is so no one ha…s access to your funds, but you. You will definitely want to submit your paystubs to your plan administrator to determine the discrepancy.
By withholding I will guess that you mean the amounts that you are contributing to your 401K BEFORE income taxes (deferred compensation amount) that will not be subject to the… income taxes during the year and will reduce the amount of your taxable gross wage amount that is reported in box 1 of your W-2 form at the end of the tax year. The deferred contribution amounts will be subject to income tax in future years when you retire and start receiving distribution the taxable distribution amounts from your 401K plan and at that time the taxable amounts will added to all of your other gross worldwide income on your 1040 income tax return and subject to the federal income tax at your marginal tax rate.
401k's are not tax-deductible in the normal sense of the word. However, since normal 401k contributions are made with pre-tax funds, taxable income is reduced. As taxable in…come is reduced, tax is then reduced as well.
Do you still have to pay taxes on the twenty percent withholding from your distribution of your old 401k?
YES the taxable amount of the distribution is added to all of your other gross worldwide income on your 1040 federal income tax return and taxed at your marginal tax rate. If …you are under the age of 59 1/2 and you do NOT meet any of the exemption form the 10% early withdrawal penalty then the 10% early withdrawal penalty will also apply to the taxable amount of the distribution. You will get a credit for the 20% amount that was withheld from your distribution amount as an advance payment of any possible taxes that would be due. When your 1040 federal income tax return is completed correctly the withheld amount will be entered on page 2 of the 1040 income tax return line 61 Federal income tax withheld from Forms W-2 and 1099 line 61 $$$$ amount.
Withholding tax comes in various forms and types: The 2 most common are for payroll, where tax is withheld and sent to th appropriate jurisdictions - Federal, State, City and… even local - depending on what is needed for that particular income. The income taxes are sent to the tax jurisdiction and placed in an account entirely for the benefit of the employee. They are an estimated payment on tax that will be calculated at year end. (Additionally, other payroll requirements of things like FICA, Unemply Insur, FUTA, Workers Comp, etc., etc. may be withheld fro the pay given the employee). THIS TAX IS ENTIRELY IN THE CONTROL OF TE EMPLOYEE/TAXPAYER and just like the tax that will be due at the end of the income period it is an estimated payment on, because of all the variables in calculating tax (like single or joint filing, number of dependents, mortgage interest payments, IRA/401k contributions, etc., etc., etc), there is no specific or even right/required answer to your question. There is also another withholding - called "backup" withholding. It is generally used only for foreigners who may try to avoid paying tax on US source income, and those who faile to provide SS#s or may have had problems reporting income on their annual return in the past. It requires that 20% of any payment (say interest on investments, or even rents, etc) be withheld and paid to the US on their behalf. In which case $107.26 of this amount would be submitted.
Your plan administrator should be able to tell you the percentage that your 401K plan will allow you to contribute as your part of the deferred compensation amount. The amount… that an employee may elect to defer to a 401(k) plan is limited by the Internal Revenue Code. In addition, your elective contributions may be limited based on the terms of your 401(k) plan. go to the IRS gov web site and use the search box for Publication 525, Taxable and Nontaxable Income, for more information about elective contributions. Click on the below related links
Complete Form W-4 Employees Withholding Allowance Certificate and give it to your employer payroll department so that your employer can withhold the correct amount of federal …income tax from your pay that you want withheld. Consider completing a new Form W-4 each year and when your personal or financial situation. Go to the IRS gov web site and use the search box for W-4 The IRS has a useful tool available for this purpose called the IRS Withholding Calculator. Go to the IRS gov web site and then scroll down the left side of the page under ONLINE SERVICES choose Withholding Calculator. You can use the search box at the IRS gov web site and type IRS Withholding Calculator This easy to use calculator can help you figure your Federal income tax withholding so your employer can withhold the correct amount from your pay. This is particularly helpful if you've had too much or too little withheld in the past, your situation has changed, or you are starting a new job. Click on the below related links
The maximum tax deductible contributions allowed by the IRS to be made to a 401K plan per year is lesser than fifteen percent of ones income. If one is over the age of 50, the… IRS allows an additional $5,500 per year. These numbers change based on the IRS formulated costs of living per year.