401(K) & Roth(K) early withdrawal question

[Hog on Beale]

Hello,

I have a 401(k) & Roth(k) retirement account through my employer.  I live in AR and work in TN.  I'm debating on taking an early withdrawal, but I'd like to know what type of negative impact/penalty this will have on the distribution and on my tax return for 2013.  Of course, I know that it's highly frowned upon to take an early withdrawal from a retirement account.  I'm only considering it because it would alleviate a lot of financial stress.

I know that there is a 10% penalty on top of the regular taxes owed.  About 1/3 of the funds are from Roth(k), and the other 2/3 are from 401(k), profit sharing and qualified safe harbor from my employer.  I've contributed to the plan for about 6 1/2 years, and there's only about $20K in it. 

The Roth(k) part confuses me, as I've seen a lot of different information on various financial boards as to how it is handled.  Will the Roth(k) portion also be subject to the 10% penalty, or will only the gains be subject to the penalty?  Will the Roth(k) be taxed again even though the contributions have already been taxed?  I certainly hope not. 

Also, will the 10% penalty and taxes be taken up front from the distribution, or will I pay that when I file my 2013 taxes?  Any idea as to what the distribution amount would be up front and what I would owe when I file my 2013 tax return?  Sorry for so many questions.  I should probably consult with a tax accountant, but thought I'd run the scenario past you guys first. 

Any advice would be greatly appreciated. 

[JIMMY BOARFFETT]

Funds withdrawn from a 401K, prior to age 57, are subject to a 10% penalty by the Federal Government, the taxes owed on the sum (remember the withdrawal counts as income and could put you into a higher bracket for the year) plus....are you ready for this?  The great state of Arkansas gets an additional 1% penalty!  My accountant went off when we learned this.  He services clients in Texas, Oklahoma and I think he said Kansas and Missouri and none of those states take a penalty such as this.

I don't know anything about the Roth stuff.

[Arkansasbeaux]

With roth 401k's it gets a little tricky. Early Roth 401k's were treated a lot like traditional 401k's. So you really need to check with your plan manager on how yours is structured. If yours is structured like a Roth IRA, then you can take out as much as you contributed. Anything more than that will result in being taxed and a 10% early withdrawal penalty. As far as how the penalty is paid, it depends on your options they have in the plan. Most plans will allow you to withhold a percentage of the withdrawal. If you choose nothing, then you will pay it next year when you do taxes. You will get a 1099R with a code "1", which tells your CPA or tax software that it was an early distribution and therefore triggers the penalty. Let me ask you this....have you looked into your 401k plans loan options? It may have some interest on it to pay but would be less than the 10% penalty, not to mention the taxes you will have to pay (which could possibly bump you into a higher bracket). Let me know what other questions you have. I am a financial advisor for Edward Jones so I have a plethora of information I can search for you.

[Ash]

We took out a 401k loan against my 401k to help with some debt. Not only is the interest pretty low but the interest goes into your 401k along with the principal iirc.

[jkstock04]

We took out a 401k loan against my 401k to help with some debt. Not only is the interest pretty low but the interest goes into your 401k along with the principal iirc.

This...I have a buddy who did this and he told me the same exact thing. Really not a bad deal if you are looking at a last case scenerio.