How to use the 401(k) early withdrawal calculator
- 1 Enter the amount to withdraw and your age.
- 2 Choose whether a penalty exception, such as the rule of 55, applies.
- 3 Choose your filing status and enter your other income and state tax rate.
- 4 Enter a return and retirement age to see what the money could grow to.
Worked example
A single 45-year-old with $70,000 of other income withdrawing $20,000, with a 5% state tax. Federal tax is $4,400 (22% bracket), the 10% penalty $2,000 and state tax $1,000, so $7,400 (37%) goes to tax and you keep $12,600. The plan withholds $4,000, leaving $2,400 owed at tax time. Left invested at 7%, the $20,000 could be $77,394 at 65.
Before you cash out
- Check for a penalty exception, such as the rule of 55.
- Consider a 401(k) loan instead.
- Roll over when you change jobs rather than cashing out.
- Set aside money for tax: 20% withholding may not cover it.
See the long-term value with the 401(k) Calculator, compare with a Personal Loan Calculator, and check your bracket with the Tax Bracket Calculator.
Features
Real cost
Federal tax at your bracket, the 10% penalty and state tax.
Withholding check
Compares the 20% withheld with the tax you will owe.
Opportunity cost
What the withdrawal could be worth at retirement.
When to use it
Facing a big bill
Compare with borrowing using the Personal Loan Calculator.
Paying off debt
Plan a payoff without touching retirement with the Debt Snowball Calculator.
Changing jobs
Roll the money over instead. See the long-term value with the 401(k) Calculator.
Retiring early
Plan withdrawals with the Retirement Withdrawal Calculator.
Related Savings and Investing tasks
Frequently asked questions
What is the penalty for withdrawing from a 401(k) early?
An additional 10% tax on the taxable amount if you are under 59½, on top of regular income tax. On a $20,000 withdrawal that is $2,000.
How much tax will I pay on a 401(k) withdrawal?
It is added to your income and taxed at your federal brackets, plus state tax in most states. In the example, $20,000 costs $4,400 of federal tax at 22%, $2,000 of penalty and $1,000 of state tax.
Why does my plan withhold 20%?
Federal law requires 20% withholding on 401(k) distributions paid to you that could have been rolled over. It is a prepayment: if your real tax and penalty are higher, you owe the rest when you file.
What is the rule of 55?
If you leave your job in or after the year you turn 55 (50 for some public safety workers), withdrawals from that employer's 401(k) are free of the 10% penalty. It does not apply to IRAs.
What other exceptions avoid the penalty?
Total and permanent disability, a terminal illness, medical expenses above 7.5% of AGI, a qualified domestic relations order, substantially equal periodic payments, up to $5,000 per birth or adoption, and an emergency withdrawal of up to $1,000 a year, among others.
Is a hardship withdrawal penalty-free?
Not necessarily. A hardship withdrawal lets you take money out while employed, but the 10% penalty still applies unless a separate exception covers it.
Is a 401(k) loan better?
Often. A loan has no tax or penalty if you repay it on time, usually up to $50,000 or half your balance. If you leave your job, the balance may become due.
What about Roth 401(k) or Roth IRA money?
Your own Roth IRA contributions can come out tax- and penalty-free at any time. Earnings, and Roth 401(k) withdrawals that are not qualified, can be taxed and penalized.
How much does an early withdrawal really cost?
Besides tax and penalty, you lose the growth. $20,000 left to grow at 7% for 20 years would be about $77,000.
Does this calculator include state penalties?
It includes your state income tax rate. A few states, such as California, add their own early withdrawal penalty.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
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