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Learning, Sharing, and Teaching => Taxes => Topic started by: clarkfan1979 on November 07, 2018, 11:58:24 AM

Title: selling 403b early
Post by: clarkfan1979 on November 07, 2018, 11:58:24 AM

I sold $5,000 from a 403b to help finish renovations for a mother-in-law suite. I went over budget by $4,000. Once it is finished in about 3-4 weeks, i will get $1,500-$1,600/month in rent.

The representative said that 20% of federal income tax is withheld and that's it. No payroll taxes are withheld. Why are no payroll taxes withheld?

I do have to pay a 10% penalty when I pay my taxes in March 2019. However, we originally deposited the money in 2015 when we were strategically avoiding the 25% tax bracket. Now we are claiming the money when we are in the 12% tax bracket, so the 10% penalty doesn't seem like that big of a deal.

Title: Re: selling 403b early
Post by: walkwalkwalk on November 07, 2018, 12:00:05 PM

"Why are no payroll taxes withheld?"

Because you already paid payroll taxes on it. When it was deducted, it reduced your federal income but not the income subect to FICA.