My brother-in-law worked at shuffle master for 10 years and at 65 has accumulated a 401k that he would like to liquidate in order buy a home. Will he have to pay a penalty, will he be taxed at ordinary income rates or will this be considered a long term capital gain? And, does it matter what he does with the money?
Tax Professional Answers
If he does make a distribution, the amount would be taxable as ordinary income. Trustee would withhold 20% for Federal tax.
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