401(k) Early Withdrawal Penalty Calculator 2025

Introduction

Cashing out a 401(k) before age 59½ is expensive. You'll face income tax + 10% penalty on the withdrawal. A 401(k) Early Withdrawal Calculator shows exactly how much you'll lose.

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The Cost Breakdown

1. Federal Income Tax

Withdrawals are taxed as ordinary income at your marginal rate (10%-37%).

2. 10% Early Withdrawal Penalty

Applied to the full amount unless you qualify for an exception.

3. State Tax (if applicable)

Most states also tax the withdrawal.

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Example Calculation

Scenario: You withdraw $50,000 at age 45.

• Federal Tax (24% bracket): $12,000
• 10% Penalty: $5,000
• State Tax (5%): $2,500
• Total Cost: $19,500
• Net Proceeds: $30,500

You lose 39% just to access your own money!

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Exceptions to the 10% Penalty

You can avoid the penalty (but NOT the tax) if:

• You're 55+ and left your job
• You're permanently disabled
• You have unreimbursed medical expenses exceeding 7.5% of AGI
• You're taking substantially equal periodic payments (Rule 72(t))

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FAQ

Q: Can I borrow from my 401(k) instead? A: Yes, many plans allow loans up to $50,000 or 50% of your balance. You pay yourself back with interest, avoiding taxes and penalties.

Q: Should I ever cash out my 401(k)? A: Only as a last resort. Explore personal loans, HELOCs, or 401(k) loans first.

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Related Tools

• Retirement Savings Calculator: /calculator/02-retirement-savings-calculator

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Conclusion

Early 401(k) withdrawals destroy wealth. Use this calculator to see the true cost before making a decision you'll regret.