How Not To Pay Taxes On 401K Withdrawal? 
The whole idea of a 401 -LRB- k -RRB- is that you defer taxation on the deposit and the earnings of the 401 -LRB- k -RRB- until a later date . The assumption is that you will be avoiding a high tax now for a low tax later . The irony is that is not always the case . The IRS will not only tax your 401 -LRB- k -RRB- but they will force you to take withdrawals at a predetermined rate after you reach seventy and a half years of age , unless you are still working . While you can not avoid paying the tax , there are schemes that would allow you to take the Required Minimum Distributions -LRB- RMD -RRB- each year and hopefully preserve the money in the fund . However , when you die , your beneficiaries will have the privilege of paying the taxes on the money . 