I am leaving my company and have a 401k and need to pay some debts. Can i take some money out to pay for those and roll the rest over to the new company? And I know there is fees of 10% and other tax I dont mind that but I want to know do they automatically with hold that or do I have to pay the tax the following year?

knowing from experience, it's a bad idea to withdraw money from a 401k - the 10% will be withheld by the financial institution that has the 401k account, and when you file taxes next year, you will receive a 1099R showing the penalties that you must pay for that early withdrawal..............total of penalties is 20 % - ouch !!

If you are willing to pay the penalty. You could also try to do a loan from your 401k. That usually comes at less of a penalty than an outright withdrawal.

Don't

Can't get loan as you're leaving company

Depending on age may be exception to penalty

Want to do direct rollover, trustee to trustee

Go to brokerage or bank to open IRA, have them arrange transfer from 401k to IRA

You pay 10% penalty plus tax at your rate (15%?, 25%)

Unless you request no w/h they typically w/h 20%

they will withhold 20% - that might not be enough to cover all you will actually owe - if you are in teh 25% tax bracket including the amt withdrawn(+ teh tax withheld), then you actual amt owed will be 25% of the total withdrawal, so you should put aside another 15% - if you actually need $5000 to pay bills, withdraw $7700 (5000/0.65) . 1540 will be withheld and put the other 1160 in the bank for remaining taxes