What is a 401(k) early withdrawal penalty?

If you make an early withdrawal from a traditional 401 (k) retirement plan, you must pay a 10% penalty on the withdrawal. There are some exceptions to this rule, such as certain health expenses and life events. Learn more below about how to calculate your specific 401 (k) early withdrawal penalty.

How do I calculate early 401(k) withdrawals?

Here’s the Forbes Advisor 401 (k) Early Withdrawal Calculator: Our calculator enables you to see the impact of an early 401 (k) withdrawal in terms of lost investment opportunities. All you need to do is type in each of the following variables: Retirement account balance. The amount of money currently in your 401 (k). Amount you’d like to withdraw.

How can I avoid a 401(k) withdrawal penalty?

This avoids the 10% penalty and taxes that would be charged on a withdrawal. Another possible option is to make sure your withdrawal meets one of the hardship withdrawal requirements. Instead of tapping into your 401 (k), you may also be able to use your individual retirement account (IRA) to avoid the withdrawal penalty.