Withdrawal Rules for 401(k) Plans

Don't withdraw money from your 401(k) without reading this.

By Kailey Hagen – Updated Nov 25, 2025 at 11:51 AM

Key Points

Withdrawals from a 401(k) before age 59 1/2 usually incur a 10% penalty plus income taxes.
Roth 401(k)s do not have required minimum distributions.
Penalty-free early withdrawals are allowed for hardship or if leaving employment after age 55.

A 401(k) is a tax-advantaged retirement account you can contribute to with pretax money. Contributions are usually deducted directly from your paycheck.

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An infographic explaining the rules around making withdrawals from your 401(k). — Image source: The Motley Fool

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Because investing for retirement through a 401(k) plan confers tax advantages, the government places some restrictions on 401(k) withdrawals. If you withdraw funds before reaching age 59 1/2, you may face early withdrawal penalties.

Here's what you need to know about how withdrawing money from a 401(k) works -- including how much early withdrawals can cost you and which circumstances qualify you for a penalty exemption.

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About the Author

Kailey Hagen, CFP, is a contributing Motley Fool retirement analyst covering Social Security, Medicare, and retirement planning. Before The Motley Fool, Kailey was a research analyst for Reviews.com focusing on credit and banking products. She is a Certified Financial Planner® and holds a bachelor’s degree in English from the University of Wisconsin-Madison.

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