Updated October 1, 2026. Quick answer: You can generally take money out of a 401(k) at any time the plan allows, but a withdrawal before age 59 1/2 is an early distribution: it is taxed as income and carries a 10% additional tax unless an exception applies. The exceptions that work for a 401(k) include leaving the employer in or after the year you turn 55, disability, death, and a series of substantially equal payments. A hardship withdrawal is allowed only if the plan offers it, and it is still taxable. Cashing out a pre-tax balance also triggers 20% mandatory federal withholding, which is not the same as the tax you finally owe.
Retirement forms read line by line: Form 8915-F, Form 8915-F items A to D and Form 8915-F line 1.
Read box by box from the IRS form text: Form 1099-R box 5, Form 1099-R box 6 and Form 1099-R boxes 9a and 9b.
State by state, the tax on your own withdrawals: state tax on 401(k) and IRA withdrawals, state by state.
Price an IRA withdrawal against the 2026 brackets: IRA withdrawal calculator.
Put a withdrawal through the 2026 brackets: 401(k) withdrawal calculator.
The basic rule: age 59 1/2
The IRS explains why the line exists: “To discourage the use of retirement funds for purposes other than normal retirement, the law imposes a 10% additional tax on certain early distributions from certain retirement plans.” “The additional tax is equal to 10% of the portion of the distribution that’s includible in gross income.”
Where the line falls: “Generally, early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59½.” A 401(k) is a qualified plan, so the rule applies to it. A withdrawal at or after 59 1/2 is still ordinary income if the money is pre-tax, but it carries no additional tax.
Exceptions that apply to a 401(k)
The IRS publishes a table of exceptions and marks which ones work for qualified plans such as a 401(k) and which work only for IRAs. It opens with the rule: “Individuals must pay an additional 10% early withdrawal tax unless an exception applies.”
| Exception | Condition (summarized from the IRS table) | Code section |
|---|---|---|
| Death of the participant | Paid to a beneficiary or the estate | 72(t)(2)(A)(ii) |
| Total and permanent disability | The participant is disabled | 72(t)(2)(A)(iii) |
| Separation from service at or after 55 | You leave the employer in or after the year you reach age 55 (50 for certain public safety employees) | 72(t)(2)(A)(v), 72(t)(10) |
| Substantially equal payments | A series of payments over your life expectancy | 72(t)(2)(A)(iv) |
| Medical expenses | Unreimbursed expenses above 7.5% of AGI | 72(t)(2)(B), 213(a) |
| Birth or adoption | Up to $5,000 per child | 72(t)(2)(H) |
| Emergency personal expense | One distribution a year, up to $1,000 | 72(t)(2)(I) |
| Disaster recovery | Up to $22,000 after a federally declared disaster | 72(t)(2)(M) |
| Domestic abuse victim | The lesser of $10,000 or 50% of the account | 72(t)(2)(K) |
| Qualified domestic relations order | Paid to an alternate payee | 72(t)(2)(C) |
| IRS levy | The plan is levied by the IRS | 72(t)(2)(A)(vii) |
Each row is marked yes in the IRS table’s column for qualified plans. Two familiar exceptions are not: the table marks first-time homebuyers (up to $10,000) and qualified higher education expenses as available for IRAs and not for qualified plans such as a 401(k).
The rule of 55
The IRS words it this way: “Distributions made to you after you separated from service with your employer after attainment of age 55.” The plan you left is the one that qualifies, and the table lists the exception under qualified plans, not IRAs. For the details, including what happens to a plan you roll over, see the rule of 55 page and the comparison with 72(t) payments.
Substantially equal payments
The IRS describes the other early-access route: “Distributions made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary.” For a 401(k) the same page adds that you must have left the employer before the payments begin. Once started, the schedule is rigid, so confirm the method with a tax professional before the first payment.
Hardship withdrawals
A hardship withdrawal is a plan feature, not a right: “Although not required, a retirement plan may allow participants to receive hardship distributions.” If the plan has the feature, the need has to qualify: “Due to an immediate and heavy financial need.” and “Limited to the amount necessary to satisfy that financial need.”
The IRS safe-harbor reasons include “Medical care expenses for the employee, the employee’s spouse, dependents or beneficiary.” and “Funeral expenses for the employee, the employee’s spouse, children, dependents, or beneficiary.” The IRS is blunt about what does not count: “Consumer purchases (such as a boat or television) are generally not considered an immediate and heavy financial need.”
The tax treatment: “Hardship distributions are subject to income taxes (unless they consist of Roth contributions). They may also be subject to a 10% additional tax on early distributions.” “Employees who take a hardship distribution can’t: repay it to the plan, or roll it over to another plan or an IRA.”
Withholding is not the tax you owe
A cash-out from a plan is withheld at a set rate: “Any taxable eligible rollover distribution paid to you from an employer-sponsored retirement plan is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later.” And withholding can fall short: “Distributions from a qualified retirement plan are subject to federal income tax withholding; however, if your distribution is subject to the 10% additional tax, your withholding may not be enough.”
| Example (computed here, not an IRS example) | Amount |
|---|---|
| Pre-tax cash-out paid to you | $20,000 |
| 10% additional tax if no exception applies | $2,000 |
| 20% mandatory federal withholding | $4,000 |
The example applies the two percentages to a $20,000 pre-tax cash-out. The $2,000 is owed in addition to ordinary income tax at your own rate, and the $4,000 withheld is a prepayment against the final bill, not the final bill. A hardship withdrawal cannot be rolled over, so it is not an eligible rollover distribution and this 20% rule is not what applies to it.
When withdrawals become required
At the other end, the IRS says: “You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 73.” “Participants in a workplace retirement plan (for example, 401(k) or profit-sharing plan) can delay taking their RMDs until the year they retire, unless they’re a 5% owner of the business sponsoring the plan.” The mechanics are on the required minimum distribution page.
Other plan types
The 10% rule does not reach every plan the same way. The IRS says “In general, an eligible state or local government section 457 deferred compensation plan isn’t a qualified retirement plan and any distribution from such plan isn’t subject to the 10% additional tax on early distributions.” See the 457(b) withdrawal rules and the 403(b) withdrawal rules.
Common mistakes
- Assuming the 10% additional tax is the only cost. The withdrawal is also ordinary income when the money is pre-tax.
- Counting the IRA-only exceptions, such as first-time homebuyer and higher education, as 401(k) exceptions.
- Treating the 20% withheld as the final tax. Your actual rate can be higher or lower.
- Assuming a hardship withdrawal is always available. The plan has to offer it, and it cannot be paid back.
Related: the early withdrawal penalty exceptions, Form 5329, a 401(k) loan offset after a layoff, and retirement withdrawals.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for retirement withdrawals
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
Opens on WiserAdvisor’s site in a new tab.
See how an advisor plans your withdrawals
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- IRS Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (page last reviewed 24-Sep-2026): https://www.irs.gov/taxtopics/tc558
- IRS, Retirement topics: Exceptions to tax on early distributions (page last reviewed 11-Dec-2025): https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
- IRS, Retirement topics: Hardship distributions (page last reviewed 26-Feb-2026): https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions
- IRS Topic no. 413, Rollovers from retirement plans (page last reviewed 24-Sep-2026): https://www.irs.gov/taxtopics/tc413
- IRS, Retirement plan and IRA required minimum distributions FAQs (page last reviewed 29-Jan-2026): https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions
Read from the IRS pages linked above on October 1, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.