In your 50s, it is tempting to pull from a 401(k) to pay the IRS. Before 59 and a half, that can add a 10% tax on top of income tax.
Many people in their 50s have more in retirement accounts than in the bank. That makes the 401(k) look like an easy fix.
Early withdrawals before age 59 and a half usually add a 10% additional tax, on top of regular income tax.
A payment plan or other option may cost less. A tax pro can compare them for you.
Steps that help
- Ask about a payment plan before you touch a 401(k).
- If you already took money out, set tax aside for it.
- Check for exceptions to the 10% tax with a tax pro.
Help that may fit
Results depend on your situation. Not every case qualifies.
Common questions
Should I use my 401(k) to pay the IRS?
It can cost more than you think. Before age 59 and a half, a 10% additional tax usually applies on top of income tax.
Can I get help if I already owe?
Yes. A tax pro can look at payment plans, penalty relief and other options for your case. Results depend on your situation. Not every case qualifies.