This can include early withdrawal penalties and taxes: federal and state income taxes and a 10% penalty on the amount that you withdraw. Most Americans retire in their mid-60s, and the Internal Revenue Service (IRS) allows you to begin taking distributions from your 401 (k) without a 10% early withdrawal penalty as soon as you are 59½ years old.
What are 401(k) withdrawal rules?
401 (k) withdrawal rules affect when account holders can take withdrawals without penalty. If you retire after age 59½, you can start taking withdrawals without paying an early withdrawal penalty. The IRS allows for hardship withdrawals that usually are not subject to the 10% penalty.
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.
