acalculator

Is a 401(k) early withdrawal worth it?

Enter the amount, your age and your other income to see what a 401(k) early withdrawal really costs, and what the money could grow to if you left it invested.

Your numbers

Filing status
More options
You keep
$14,247.00

Taking $20,000.00 out early at age 40 costs about $5,753.00; you keep $14,247.00.

Cost of the withdrawal
$5,753.00
10% additional tax
$2,000.00
Federal income tax on it
$3,753.00
State tax
$0.00
Share lost
28.77%
Withheld by the plan
$4,000.00
Left invested, it could grow to
$85,837.41

You keep: $14,247.00. Taking $20,000.00 out early at age 40 costs about $5,753.00; you keep $14,247.00.

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Shows what a 401(k) early withdrawal before 59½ costs: the 10% additional tax, the 2026 federal income tax it adds, state tax, and what the money could have grown to.

Example with the default inputs (Withdrawal $20,000.00, Your age 40, Left this employer in or after the year I turned 55 No, Part covered by another exception $0.00, Other taxable income $60,000.00, Filing status Single, State income tax rate 0%, Yearly return if left invested 6%, Years until you would retire 25): Taking $20,000.00 out early at age 40 costs about $5,753.00; you keep $14,247.00.

Method: 10% additional tax = 10% × (withdrawal − exempt part) before 59½ unless the rule of 55 applies; federal tax = 2026 tax on (other income + withdrawal) − tax on other income; state = withdrawal × rate; growth given up = withdrawal × (1 + return)^years.

  • Federal tax for tax year 2026 with the standard deduction and regular brackets; all other income is ordinary income, no credits.
  • Under 59½ means an age below 59.5. The rule of 55 applies only to the plan of the employer you left, not to IRAs.
  • Pre-tax money only. Roth contributions come out tax and penalty free; Roth earnings before 59½ are taxed and penalized.
  • State tax is one flat rate; some states add their own early withdrawal tax, which is not included.
  • Growth given up is before tax and fees and assumes a steady yearly return.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Withdrawal $20,000.00, Your age 40, Left this employer in or after the year I turned 55 no, Part covered by another exception $0.00, Other taxable income $60,000.00, Filing status Single, State income tax rate 5%, Yearly return if left invested 6%, Years until you would retire 25 gives 10% additional tax $2,000.00, Federal income tax on it $3,753.00, State tax $1,000.00, You keep $13,247.00, Left invested, it could grow to $85,837.41.Source: IRC 72(t) 10% additional tax (IRS Topic 558); 2026 single brackets (Rev. Proc. 2025-32)
  2. Withdrawal $50,000.00, Your age 56, Left this employer in or after the year I turned 55 yes, Part covered by another exception $0.00, Other taxable income $0.00, Filing status Married filing jointly, State income tax rate 0%, Yearly return if left invested 0%, Years until you would retire 0 gives 10% additional tax $0.00, Federal income tax on it $1,783.00, You keep $48,217.00, Left invested, it could grow to $50,000.00.Source: IRS Topic 558 (separation from service in or after the year you reach 55)
  3. Withdrawal $10,000.00, Your age 35, Left this employer in or after the year I turned 55 no, Part covered by another exception $5,000.00, Other taxable income $30,000.00, Filing status Head of household, State income tax rate 0%, Yearly return if left invested 7%, Years until you would retire 0 gives 10% additional tax $500.00, Federal income tax on it $1,000.00, You keep $8,500.00.Source: IRS Topic 558 (qualified birth or adoption distribution up to $5,000)

How it works

Ages. The page takes ages from 0 to 64; from 65 the age deductions apply, so use the taxes on 401(k) withdrawal calculator. With the rule of 55 ticked and an age below 50 there is no answer, because the rule needs you to leave the job in or after the year you turn 55 (50 for public safety workers).

1. 10% additional tax. It applies when your age is below 59.5 and the rule of 55 does not apply. Then it is 10% × (withdrawal − the part covered by another exception, not below 0). Otherwise it is 0.

2. Federal income tax on the withdrawal = 2026 federal tax on (other income + withdrawal) − 2026 federal tax on other income alone. Each: income − the standard deduction ($16,100 single or separate, $32,200 joint, $24,150 head of household), not below 0, taxed at the 2026 brackets. Below $100,000 of taxable income the Form 1040 Tax Table method is used: the tax at the middle of the $50 row (smaller rows below $3,000), rounded to the whole dollar; from $100,000, the exact rate schedule. (See the taxes on 401(k) withdrawal calculator for the full bracket table.)

3. State tax = withdrawal × state rate.

4. Cost = 10% tax + federal tax + state tax. You keep = withdrawal − cost. Share lost = cost ÷ withdrawal.

5. Withheld by the plan = 20% of the withdrawal.

6. Left invested = withdrawal × (1 + yearly return)^years.

Assumptions

  • No credits or itemized deductions; all other income is ordinary income. People 65 or older are not early withdrawers, so no age deductions are applied.
  • Some states add their own early withdrawal tax; it is not included.

Worked examples by hand

Age 40, single, $60,000 other income, $20,000 withdrawal, 5% state. 10% tax = $2,000. Without: taxable $43,900, middle of the row $43,925: $1,240 + 12% × $31,525 = $5,023. With: taxable $63,900, middle $63,925: $1,240 + $4,560 + 22% × $13,525 = $8,775.50, $8,776. Federal tax = $3,753. State = $1,000. You keep 20,000 − 2,000 − 3,753 − 1,000 = $13,247. Left 25 years at 6%: 20,000 × 1.06²⁵ = $85,837.41.

Rule of 55: age 56, joint, no other income, $50,000. No 10% tax. Taxable $50,000 − $32,200 = $17,800, middle $17,825: 10% = $1,782.50, $1,783. You keep $48,217.

Birth of a child: age 35, head of household, $30,000 other income, $10,000 withdrawal, $5,000 exempt. 10% of $5,000 = $500. Without: taxable $5,850, middle $5,875: $588 (rounded from $587.50). With: taxable $15,850, middle $15,875, still in the 10% bracket (to $17,700): 10% × $15,875 = $1,587.50, $1,588. Federal tax = $1,000. You keep 10,000 − 500 − 1,000 = $8,500.

Other questions people ask

What is the penalty for a 401(k) early withdrawal?

A withdrawal before age 59½ usually owes a 10% additional tax on top of regular income tax (IRC section 72(t), IRS Topic 558). On $20,000 that is $2,000, plus the income tax the $20,000 adds to your return.

What is the rule of 55?

If you leave your job in or after the year you turn 55, withdrawals from that employer’s 401(k) have no 10% additional tax (age 50 for qualified public safety employees in a government plan). The rule does not cover IRAs or plans of earlier employers you left before 55.

Which other exceptions avoid the 10% tax?

Among them: total and permanent disability, medical expenses above 7.5% of your adjusted gross income, a qualified birth or adoption distribution up to $5,000, one emergency personal expense distribution of up to $1,000 a year (from 2024), substantially equal periodic payments, and a court order in a divorce. Income tax still applies.

Why does the plan withhold 20%?

A plan must withhold 20% for federal income tax from a distribution that could be rolled over when it pays you directly. The 20% is a prepayment; the 10% additional tax and any higher bracket are settled when you file.

What does an early withdrawal cost in the long run?

The money stops growing tax deferred. At 6% a year, $20,000 left for 25 years grows to about $85,837 before tax. A 401(k) loan or a hardship withdrawal may cost less; check your plan’s rules.