On Sunday, November 17, 2019 at 1:31:06 PM UTC-5, Ralph Mowery wrote:
In article ,
says...

I was thinking of the regular income tax you will have to pay on the
401k plus the extra 10 %. That could hit you for close to 40 % which I
call heavy.

But you have to pay the regular tax regardless of whether you take it out
early or not. And you'd have to have taxable income of over $160K to wind
up in the 32% bracket. If you're a couple, take out $50K, the regular
tax would be minimal, maybe zero. It's only 12% up to $39K and that's
taxable income, after all the deductions.






Taxes and early 401(k) withdrawal penalty
There also is an immediate cost to cashing out. For one, it can generate
a large tax bill. Your plan administrator is typically required to
automatically withhold 20% of your withdrawal and send it directly to
the IRS to cover the federal income taxes you may need to pay on that
withdrawal. "That means you just gave the IRS a huge chunk of the money
you've been saving for years," says Hevert. "That's money you're no
longer saving for retirement." In addition to federal and state income
tax, investors younger than 59? who cash out may have to pay a 10% early
withdrawal penalty.

https://www.fidelity.com/viewpoints/...nt/cashing-out

Nothing there that deviates from what I said. Withholding isn't equal to actually paying tax. Early withdrawal results in an additional ten percent tax. If that is what you call huge, then that's what it is.