What % should I withhold for state taxes when taking a lump sum distribution for my 401k?
Wednesday, June 30th, 2010 at
7:36 pm
I am taking a lump sum distribution from my 401K (job change). I know it’s not the best choice for my future, but circumstances require it. I know I will have 20% taken in Federal Income Tax, and a 10% early withdrawl taken, but should I withold some $ for State Taxes? If so, how much is it for WI residents?
Thank you all!
Filed under: 401k
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I would ask your 401k administrator. They have all the information they need at their finger-tips as to state taxes to withhold. Unfortunately, with WI the state tax percentage varies by income level, between 4.6% and 6.75%. If I were you I’d have them withhold 7% even. That way you will probably get money back in the spring if they withheld too much.
Also, with regard to the Federal, you can also have them withhold a little extra for Federal as well. I’d recommend this, as it hurts too much to take a hit later than have a lump sum reduced by a little more in the beginning. That’s just my experience.