What is the 401(k) early withdrawal penalty?

401 (k)s are intended for retirement savings, so the IRS generally prohibits withdrawals before age 59½. The penalty for early distributions from 401 (k)s is generally 10%, in addition to income taxes you’ll owe. There are several ways to avoid the 401 (k) early withdrawal penalty. 401 (k)s are popular tax-advantaged retirement accounts.

What are the costs of early withdrawals from a 401(k)?

Learn the immediate and lingering costs of early withdrawals from your retirement plan. An early withdrawal from a 401 (k) means missing out on the investment growth in the fund. Early withdrawals from a 401 (k) often incur a 10% early withdrawal penalty if you're under 59 1/2.

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

If you’re making an early withdrawal from a Roth 401 (k), the penalty is usually just 10% of any investment growth withdrawn—contributions are not part of the early withdrawal fee calculation for this type of account. But the entire account balance counts for calculating the fee if you’re making an early withdrawal from a traditional 401 (k).