<prompt> Human: Hello friends. I left my employer after 3 years and found a better job. I have a vested balance of 10,000 401k from my former employer. From what Ive read on the sidebar and a few posts, the smartest decision would be to roll over to an IRA or to my new employer if they allow it. I would like some help understanding the consequences for withdrawing early on, specifically tax wise. So far I understand that I would be hit with a 10 early withdrawal penalty. I have a difficult time understanding what happens tax wise. I apologize in advance if my questions dont make any sense, but Ill try my best. So Im in the 15 bracket with my former salary. I know that I dont have any state federal tax in Texas. If I withdraw early, do I pay that 15 in addition to the 10 penalty as soon as I get it? Or do I pay it when tax income arrives? Will this only effect my tax income for the following year? Or is it something that will effect my tax income year after year? I apologize again if this has been asked a million times. Ive searched a few things in the search bar and read the FAQS on the sidebar, but I have trouble finding the answer. Any additional information is greatly appreciated.EDIT: I understand completely now. Thanks everyone!  <response>: You pay both tax liabilities when you file your federal tax return. You claim the federal tax withheld on your return, just like your withholding from wages. 