How Much Does a 401k Withdrawal Penalty Total?

If you take money out of your 401k before 59 1/2, you will have to pay a 401k withdrawal penalty. This can significantly cut into your retirement savings. Here are the basics of how much you will have to pay whenever you take money from your 401k early.

Penalty

Whenever you take money out of your account before you reach the age of 59 1/2, you are going to have to pay an early withdrawal penalty. The penalty for this process is 10 percent of however much you take out. So that you take out $5000, you are going to have to pay a penalty of $500 to the IRS when you file your taxes.

Taxes

In addition to paying the 10 percent early withdrawal penalty, you are going to have to have to pay income taxes on the amount as well. Your 401k provider is going to automatically with all 20 percent of the amount that you withdraw. This may or may not cover the taxes that you owe on the withdrawal. The amount of money that you have to pay in taxes is going to depend on how much money you make and your marginal tax rate for the year.

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