If you’re thinking about withdrawing $100K from your 401(k), there are important tax considerations to keep in mind—even if you’re over age 59½ and not subject to the early withdrawal penalty.
Recently, I teamed up with Wealth Advisor – Peter Catalano to walk through a real-life example. A couple wanted to withdraw $100,000 from their 401(k) to pay for a new pool. On the surface, it seemed like a simple and straightforward choice. They had the money available and were no longer subject to early withdrawal penalties.
But once we crunched the numbers, we realized that the tax implications of withdrawing $100K from a 401(k) could have a much bigger impact than they expected.
✅ Understanding the Tax Impact
Even after age 59.5, a 401(k) withdrawal is considered ordinary taxable income. That means the full $100,000 would be added to their income for the year. This could push them into a higher tax bracket, resulting in a significantly larger tax bill. It could also impact other areas—like Medicare premiums or eligibility for certain tax deductions or credits.
For many retirees and pre-retirees, understanding how these withdrawals affect their overall tax picture is crucial for long-term planning.
✅ Is a Loan the Smarter Option?
We also explored the idea of taking a 9% personal loan instead. While interest rates may seem high right now, preserving retirement savings often makes more sense in the long run. That money continues to grow tax-deferred (or tax-free, in a Roth), and the loan interest may be less damaging than the tax liability triggered by the withdrawal.
This kind of analysis is what helps clients make informed decisions they won’t regret later.
✅ Why Professional Guidance Matters
At Gundersons CFO & Bookkeeping, we use value-based pricing—which means we’re focused on delivering strategic results, not racking up billable hours. When you work with both a tax strategist and a financial advisor, you get a clearer picture of your options and avoid the costly surprises that often come with making big decisions alone.
Whether you’re a small business owner, nearing retirement, or facing a major financial choice, having the right team in your corner matters.
🎥 Watch the full video breakdown here:
👉 https://youtu.be/0U4b58qEDY4
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