401(k) Early Withdrawal Calculator

The IRS charges a 10% additional tax on early distributions from a 401(k) or similar qualified plan before age 59½. This is on top of ordinary income tax (federal and state). Exceptions — such as first-time home purchase (up to $10,000), certain hardships, disability, or Rule 72(t) — can waive the penalty but not the income tax.

The withdrawal is taxed as ordinary income at your federal and state marginal rates, plus a 10% penalty if under 59½ and no exception applies. For example, a $20,000 withdrawal with $75,000 other income in California could lose roughly 40–50% to federal tax, state tax, and penalty combined. The exact amount depends on your income, state, and filing status.

Early withdrawal usually costs 30–50% or more in taxes and penalty, which can outweigh debt interest savings. Alternatives like a 401(k) loan (no tax if repaid), hardship withdrawal (penalty may apply), or debt payoff strategies often work better. Compare the after-tax cost of withdrawal against your debt APR before deciding.

Common exceptions that waive the 10% penalty (but not income tax) include: disability, first-time home purchase (up to $10,000), medical expenses exceeding 7.5% of AGI, health insurance while unemployed, qualified higher education expenses, IRS levy, military reservists, and substantially equal periodic payments (Rule 72(t)). IRS Publication 575 has the full list.