What happens if you withdraw either a 401k or IRA early?
Ava Robinson
Published Apr 02, 2026
If you take an early withdrawal from a traditional IRA—whether it’s your contributions or earnings—it may trigger income taxes and a 10% penalty. Some early withdrawals are tax-free and penalty-free.
When can you withdraw the money from a traditional IRA and 401k account without a penalty?
59 ½ years old
After you become 59 ½ years old, you can take your money out without needing to pay an early withdrawal penalty. You can choose a traditional or a Roth 401(k) plan.
After you become 59 ½ years old, you can take your money out without needing to pay an early withdrawal penalty. You can choose a traditional or a Roth 401(k) plan. Traditional 401(k)s offer tax-deferred savings, but you’ll still have to pay taxes when you take the money out.
Why do I have to take early withdrawal from my 401k?
401ks, IRAs and other pre-tax retirement savings accounts are common ways to save for retirement, and millions of Americans pour money into them every year. Unfortunately, many of those same Americans take early withdrawals from these accounts due to hardship, loss of a job or other unplanned circumstances.
When do you have to take a penalty free withdrawal from a 401k?
The IRS allows penalty-free withdrawals from retirement accounts after age 59 1/2 and requires withdrawals after age 72 (these are called Required Minimum Distributions [RMDs] and the age just changed due to the SECURE Act passed in January). There are some exceptions to these rules for 401ks and other ‘Qualified Plans.’
Do you have to pay taxes on 401K withdrawals?
Normally, any withdrawals from a 401 (k), IRA or another retirement plan have to be approved by the plan sponsor, and they carry a hefty 10% penalty. Any COVID-related withdrawals made in 2020, though, are penalty-free. You will have to pay taxes on those funds, though the income can be spread over three tax years.
When do you have to start taking withdrawals from your IRA?
You cannot tap into the account without penalty until you reach age 59 1/2. Although you are not required to begin taking withdrawals when you hit 59 1/2, you are required to begin taking mandatory withdrawals at age 70 1/2.
