401k withdrawl

[letstalk2024]

Just now, Spartan said:

you are not obliliged to file taxes in US then. 

So just the 10% penalty?

[Spartan]

Just now, letstalk2024 said:

So just the 10% penalty?

India lo kattali kada tax appudu

[DallasKarreBaluu]

18 minutes ago, SaradaChinnodu said:

Has anyone withdrawn from their 401(k) before retirement or before moving back to India?
I'm exploring options and was curious if anyone has done an early withdrawal from their 401(k) — either while still in the U.S. or before relocating to India. If so, how much did you end up paying in taxes and penalties (federal, state, early withdrawal, etc.)? Would appreciate hearing real-world experiences

what is your visa anna

 

[letstalk2024]

3 minutes ago, Spartan said:

India lo kattali kada tax appudu

So still makes sense to withdraw in chunks 

[Spartan]

5 minutes ago, letstalk2024 said:

So still makes sense to withdraw in chunks 

yes

[summer27]

19 minutes ago, Spartan said:

India vellaka withdraw chesko..

you will only pay 10% penalty... and withdraw less than 25K each year...daniki tax undadu.

this is only if you have GC or citizenship

agreed with most of the suggestions here..truly you just pay 10% penalty..rest depends on how you structure income tax..

@Spartan - i read somewhere about the partial withdrawal clauses. I think itsn't that easy to withdraw partially or I think there are some consequences to it or some age limit..

[phatposts]

Talk to a CPA that understands this. 

If you withdraw before 59.5y of age - you will pay 10% penalty AND the withdrawn amount gets added to your income in the year of withdrawal. 

India vellipothe teeseyyali ani rule emi ledu. Its your personal choice. 

If you wish to withdraw AND if you are going to India, India vellina next year nunchi yearly oka 10-40K per year withdraw chesav anuko you pay less taxes. 

If you have 100K in 401K , current taxes prakaram lets say oka 25k withdraw chesav anuko you pay only 12% (assuming no deductions). Instead ippude chesav anuko - if your current tax bracket is 25% you will pay that instead of 12%. 

Penalty ni emi cheyyalev. 

Talk to cpa and let him explain everything based on your situation.

 

 

[Spartan]

1 minute ago, summer27 said:

agreed with most of the suggestions here..truly you just pay 10% penalty..rest depends on how you structure income tax..

@Spartan - i read somewhere about the partial withdrawal clauses. I think itsn't that easy to withdraw partially or I think there are some consequences to it or some age limit..

easy ani emi ledu ..

any withdrawl is same....its how much you will endup paying in taxes ani..

anduke partial withdrawl with no income for tax year is preferaable kada

[SaradaChinnodu]

1 hour ago, DallasKarreBaluu said:

what is your visa anna

 

H1b bro

[SaradaChinnodu]

1 hour ago, Spartan said:

easy ani emi ledu ..

any withdrawl is same....its how much you will endup paying in taxes ani..

anduke partial withdrawl with no income for tax year is preferaable kada

Us lo nundi not working or low income unnapudu withdraw cheste 10% penalty + lower tax bracket tax paduthundi anukunta...adhey India nundi Aithey 10% penalty + whatever indian govt choose to levy anukunta...ela choosing 401k amount theeyali ante badhude badhudu la undi..

 

may be match varaku petti diversity chesthe better emo stocks lo for easy liquidation...

[summer27]

21 minutes ago, SaradaChinnodu said:

Us lo nundi not working or low income unnapudu withdraw cheste 10% penalty + lower tax bracket tax paduthundi anukunta...adhey India nundi Aithey 10% penalty + whatever indian govt choose to levy anukunta...ela choosing 401k amount theeyali ante badhude badhudu la undi..

 

may be match varaku petti diversity chesthe better emo stocks lo for easy liquidation...

I always do it..exact match pedta..rest i move to Roth or other investments

[Mr Mirchi]

2 hours ago, Spartan said:

India vellaka withdraw chesko..

you will only pay 10% penalty... and withdraw less than 25K each year...daniki tax undadu.

this is only if you have GC or citizenship

Every year 10% penalty and adhi tax anukotame ga ika

 

idhi manchi option ye if it works

[Spartan]

4 minutes ago, Mr Mirchi said:

Every year 10% penalty and adhi tax anukotame ga ika

 

idhi manchi option ye if it works

yes

[Board123]

From CHATGPT

 

Withdrawing money from a 401(k) before age 59½ typically results in a 10% early withdrawal penalty plus income tax, but there are several strategies and exceptions that can help avoid or reduce these penalties.

Here are the best ways to withdraw 401(k) funds early without incurring the 10% penalty:

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🔓 1. Rule of 55

• What it is: If you leave your job in the calendar year you turn 55 or older, you can take penalty-free withdrawals from your current employer's 401(k).

• Key Point: Only applies to the 401(k) at your most recent employer, not old accounts rolled into an IRA.

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🧾 2. Substantially Equal Periodic Payments (SEPP) / 72(t)

• What it is: Take equal payments based on IRS-approved formulas for at least 5 years or until you turn 59½, whichever is longer.

• Pro: No penalty if you follow rules.

• Con: Once started, you must continue payments — not flexible.

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🏥 3. IRS Hardship Withdrawals

Penalty-free for:

• Permanent disability

• Medical expenses exceeding 7.5% of adjusted gross income

• Court-ordered withdrawals (e.g., child support or divorce decree)

• Death (beneficiaries avoid penalty)

Note: Income taxes still apply.

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🏠 4. First-Time Home Purchase (IRA only)

• Important: This does not apply to 401(k) — only to IRAs (up to $10,000 penalty-free).

• If you roll your 401(k) into an IRA, you can take advantage of this.

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🧾 5. Roll Over to Roth IRA (Roth Conversion Ladder)

• Strategy:

  • Roll over funds from your 401(k) to a Roth IRA.

  • Wait 5 years before withdrawing converted amounts penalty-free.

• Pro: Long-term tax strategy if retiring early.

• Con: Income tax due on conversion year.

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🧑‍⚖️ 6. Court-Ordered QDRO (Qualified Domestic Relations Order)

• Used in divorce cases where funds are split.

• The alternate payee (spouse/ex) can withdraw without penalty.

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🔥 7. Public Safety Employee Exception

• Age 50 if you’re a qualified public safety employee (e.g., police, firefighter) and separate from service.

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⚠️ Keep in Mind:

• All withdrawals are taxed as income (except Roth 401(k) contributions).

• Penalty-free ≠ tax-free.

---

✅ Best Approach Summary:

Strategy	Penalty-Free?	Tax-Free?	Notes
Rule of 55	✅	❌	Must leave job at 55+
SEPP (72(t))	✅	❌	Must commit to long-term schedule
Hardship	✅ (in some cases)	❌	Must qualify
Roth Conversion Ladder	✅ (after 5 yrs)	✅ (if Roth rules met)	Complex, needs planning
QDRO	✅	❌	Divorce-related
Disability	✅	❌	Requires proof

[chittugaadu]

there are options bro ... one of my acquaintance fellow ... 

he moved his old 401k into equity trust (as a means for investment).

from equity trust ... he moved to his friends construction company as a loan / investment. 

side lo lava devilu jarigaayi and equity trust gaadi ki naa investment lost ani cheppadu