I want to withdraw funds from my 401k to pay my medical bills. How much is the early withdrawal fee and how much will I owe in federal and state taxes?

ANSWER

The BIDaWIZ Team's Answer:

Do the medical expenses exceed 7.5% of your adjusted gross income? If so, you can make a penalty-free withdrawal made under Section 72(t) of the Internal Revenue Code. With this, you pay applicable federal and state income taxes but not the 10% early withdrawal penalty. If your medical expenses don't exceed 7.5% of your AGI, then you will have to pay a 10% penalty plus federal and state incomes taxes. The federal and state income tax depends on your income level.