401(k) Early Withdrawal Calculator
What you keep from a 401(k) withdrawal before 59½ after the 10% penalty and tax, what 20% withholding means at tax time, and how a 401(k) loan compares.
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Taking $10,000 out of your 401(k) at 40 leaves you $6,300 after the 10% penalty and income tax. It costs $3,700 now, and the same money left invested could grow to $42,919 in 25 years.
You Keep
$6,300
$3,700 in tax and penalty (37%)
Check From the Plan
$8,000
$2,000 withheld (20%) for federal tax
Still Owed at Tax Time
$1,200
federal tax + penalty − withheld, plus $500 state
The Withdrawal
A payout you could have rolled over has 20% withheld for federal tax.
Your Taxes
Where the $10,000 Goes
Your top federal bracket: 22%
| Withdrawal | $10,000.00 |
| 10% additional tax (early withdrawal penalty) | −$1,000.00 |
| Federal income tax on the withdrawal | −$2,200.00 |
| State income tax | −$500.00 |
| What you keep | $6,300.00 |
Penalty
Under 59½, the 10% additional tax applies unless you qualify for an exception.
To end up with $10,000 in hand
You would need to withdraw about $15,873, because tax and penalty also come out of the extra amount.
Or Borrow Instead: 401(k) Loan
No tax or penalty if you repay on schedule
Most you can borrow
$30,000
Lesser of $50,000 or half your vested balance, but at least $10,000 (never more than you have)
Payment per paycheck
$93.45
$10,000 over 5 years; $2,148 interest, paid back into your own account
What an Early 401(k) Withdrawal Really Costs
Money taken out of a traditional 401(k) counts as income in the year you take it. It is taxed on top of your salary, so most of it lands in your highest bracket. Before age 59½ you also owe a 10% additional tax unless an exception applies. The amount withheld from your check is only a down payment on that bill.
The Formula
You keep = withdrawal − 10% penalty − federal tax − state tax
Federal tax = tax on (other income + withdrawal − standard deduction) − tax on (other income − standard deduction)
Worked example. A 40-year-old single filer earning $75,000 cashes out $10,000 after leaving a job. Taxable income without it is $75,000 − $16,100 = $58,900, already in the 22% bracket, so the $10,000 adds $2,200 of federal tax. The 10% penalty is $1,000 and a 5% state tax is $500. That leaves $6,300, so the withdrawal costs $3,700. The plan withholds 20%, so the check is $8,000, and another $1,200 of federal tax and penalty is due at filing, plus the state tax. To have $10,000 in hand, you would need to take out about $15,873. And $10,000 left invested at 6% for 25 years would grow to about $42,919.
Loan instead. With $60,000 vested, the most you can borrow is $30,000. A $10,000 loan at 8% repaid over five years costs $93.45 a paycheck when paid every two weeks, with no tax or penalty as long as it’s repaid on time.
What this doesn’t cover
- Roth 401(k) money. This treats the whole withdrawal as pre-tax. Roth contributions come out tax-free, and only the earnings can be taxed and penalized.
- Other exceptions. Disability, substantially equal payments, a QDRO, large medical bills and others can remove the penalty. Check the IRS list below.
- Credits and deductions. Extra income can reduce credits such as the earned income credit, and can change how your Social Security benefits are taxed.
- State rules. The state rate is applied as a flat percent. Some states add their own early-withdrawal penalty, and some don’t tax retirement income.
- Your plan’s rules. Whether you can take a hardship withdrawal or loan, and the loan interest rate, depend on your plan. If you leave the job, an unpaid loan is usually due by your tax filing deadline, or it is taxed as a withdrawal.
Rules come from the IRS pages on exceptions to the early distribution tax, rollovers and withholding and plan loans. Before you take money out, talk to your plan administrator or a tax professional.
Frequently Asked Questions
?How much tax will I pay on a 401(k) early withdrawal?
The withdrawal is added to your income for the year, so it is taxed at your top federal bracket and your state rate. If you are under 59½ and no exception applies, you also owe a 10% additional tax. In the default example, a $10,000 withdrawal by someone earning $75,000 costs $1,000 in penalty, $2,200 in federal tax and $500 in state tax, leaving $6,300.
?Why is my 401(k) check smaller than the amount I asked for?
When a 401(k) pays a distribution to you that could have been rolled over, the plan must withhold 20% for federal income tax. That is a prepayment, not the final bill. When you file, the real tax plus the 10% penalty is compared with what was withheld, so you may owe more or get some back.
?What is the rule of 55?
If you leave your job in or after the calendar year you turn 55, withdrawals from that employer’s 401(k) are free of the 10% penalty (age 50 for certain public safety workers). It only covers the plan of the job you left, not IRAs or older 401(k)s, and income tax still applies.
?Is a 401(k) loan better than a withdrawal?
Often, if you will stay at the job. A loan has no tax or penalty while you repay it on schedule, and the interest goes back into your own account. The risks: the money is out of the market while it is borrowed, repayments come from after-tax pay, and if you leave the job the balance is usually due by your tax filing deadline or it becomes a taxable distribution.
?How much can I borrow from my 401(k)?
The law allows the lesser of $50,000 or half your vested balance, except that you can borrow up to $10,000 even if that is more than half. You generally must repay within five years (longer for buying a main home). Your plan may set a lower limit or not offer loans at all.
?Are there other ways to avoid the 10% penalty?
Yes. Exceptions include total and permanent disability, a series of substantially equal payments, a qualified domestic relations order, unreimbursed medical costs above 7.5% of income, and one emergency withdrawal of up to $1,000 a year. A hardship withdrawal is not an exception by itself; it can still owe the penalty.
About this calculator. Results are estimates for education and planning, based on the inputs you enter and the published formula described above. Everything runs in your browser; nothing you type is sent to us or stored. It is not financial, tax, legal or medical advice. Read the disclaimer and our methodology.
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