Making solo 401k distributions | Payment of 20% Federal Taxes

Hi, I have the following questions surrounding making solo 401k distributions.

QUESTION: How we can use the rental income from the rental house after the money (profits) is deposited in the Solo 401k Account?. Ex.: We deposit 3 thousand in rental income and we need spend 1500 for personal expenses. How much % of taxes we have to pay on this money?

ANSWER: It is important to understand that the solo 401k distribution rules must be followed, which include first qualifying to make distributions (i.e., meeting on of the distribution triggering events: retirement age or separation from service). Some plans will allow for distribution of funds previously rolled over from other 401k plans or IRAs to the solo 401k plan. If the distribution triggering event is satisfied, each solo 401k distribution must be documented on a distribution form in order to meet the written distribution requirement.  Further, 20% mandatory federal taxes apply on each amount distributed from the solo 401k and submitted electronically to the Department of the Treasury by the 15th of the month following the solo 401k distribution. What is more, a Form 1099-R to report all the distributions made during the year must be filed with the IRS by February 28 of the following year following the date of distribution. In sum, specific IRS rules must be followed when processing solo 401k distributions.

Thank you,

Jane in SouthCarolina