Early Distribution from 401K(cashout) & SS/MED , State Taxes

Discussion in 'Tax' started by Rey, Feb 3, 2005.

  1. Rey

    Rey Guest

    I left my job in 2004 and have been self-employed ever
    since. I received full early distribution from my 401K Jan
    2005.

    Things I know:
    10% penalty from total amount
    20% already withheld strictly for Federal income taxes

    Things I don't know:

    1) Since I'm self-employed when I received the distribution,
    will I have to pay full self-employment tax (6.2% + 6.2% +
    1.45% + 1.45% - 15.3%)?

    2) If so, can I deduct 1/2 of that amount that an employer
    would normally contribute?

    3) Will I have to pay Georgia State income taxes on the
    distribution?

    4) If so, is it taxed as normal income or handle
    differently?

    5) Is the taxable amount taxed all the same, or are my
    contributions vs employers contributions vs capital gains
    all taxed separately and differently with respects to
    self-employment tax and state tax?

    6) Lastly, should I be withholding from my self-employment
    income according to tax bracket after distribution, before
    distribution, or do not take in consideration the
    distribution at all?

    Thanks,
    Rey

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    Rey, Feb 3, 2005
    #1
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  2. "Rey" <> writes:

    > I left my job in 2004 and have been self-employed ever
    > since. I received full early distribution from my 401K Jan
    > 2005.
    >
    > Things I know:
    > 10% penalty from total amount
    > 20% already withheld strictly for Federal income taxes
    >
    > Things I don't know:


    Didn't you just ask all this?

    > 1) Since I'm self-employed when I received the distribution,
    > will I have to pay full self-employment tax (6.2% + 6.2% +
    > 1.45% + 1.45% - 15.3%)?


    No.

    > 2) If so, can I deduct 1/2 of that amount that an employer
    > would normally contribute?


    Moot point since answer to (1) is no.

    > 3) Will I have to pay Georgia State income taxes on the
    > distribution?


    I'm not familiar with GA specifically, but if it's like
    other states with an income tax, yes.

    > 4) If so, is it taxed as normal income or handle
    > differently?


    Normal income (but see (3)).

    > 5) Is the taxable amount taxed all the same,


    Yes.

    > or are my contributions vs employers contributions vs
    > capital gains all taxed separately and differently


    No.

    > 6) Lastly, should I be withholding from my self-employment
    > income according to tax bracket after distribution, before
    > distribution, or do not take in consideration the
    > distribution at all?


    Take the distribution into account.

    --
    Rich Carreiro

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    << messages to this newsgroup are at www.asktax.org >>
    << ------------------------------------------------->>
     
    Rich Carreiro, Feb 7, 2005
    #2
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