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It is an additional 10% tax above whatever other taxes you would owe on that money. I'm not an expert, it isn't obscure, you're better off searching if you still don't believe me. Try "401k early withdrawal penalty".


A quick google shows it's 10% more tax than you would have paid, when included with your other income.

If this withdrawal is your only income, and you keep the withdrawal below the tax-free limit (looks to be $9k), you won't pay any tax, and thus won't pay the 10% penalty either.


The 10% is figured based on the amount of the distribution, not AGI.

(For 2012, it's reported on line 58 of the 1040...)


I'm not American, I need you to explain that please.


AGI is income subject to income taxes.

Distribution means the money taken from the 401k

1040 is the main federal tax form in the U.S.

Line 58 is in the 'Other taxes' section of the form, where the amounts are figured using some basis other than the AGI. It also is where you would look in the 1040 instructions to see how the penalty is calculated.




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