Financial Answer Center

401(k) plans allow you to begin withdrawing money, without penalty, after age 59½. However, there is a 10% penalty tax on withdrawals made before age 59½ (if you don't roll it over) from your 401(k) plan, unless the distribution is made under one of the limited circumstances allowed by law. That is, there is a penalty for taking your money "too soon."

Some Exceptions to the 10% Early Withdrawal Penalty for 401(k) Plans

The 10% early withdrawal penalty does not apply to these situations:

1. Distributions made after age 59½
2. Distributions made after you separate from service during or after the year in which you reach age 55
3. Distributions that you roll over to another qualified retirement plan, tax-sheltered annuity, or IRA within 60 days.
4. Distributions made due to disability or after your death
5. Distributions for qualified medical expenses that exceed 10% of adjusted gross income in 2019 (7.5% in 2018).
6. Distributions after separation from service that are part of a scheduled series of substantially equal periodic payments

IMPORTANT NOTE: Using your retirement plan savings for non-retirement purposes should always be your last resort.
For more information, see the section Distributions Over Your Life Expectancy.