How to Take Money Out of Your 401(k)

You may need to take money out of a 401(k). Here's what you need to know.

By Kailey Hagen – Updated Dec 8, 2025 at 2:02 PM EST

Key Points

401(k) withdrawals after age 59 1/2 are penalty-free; earlier withdrawals may incur a 10% penalty.
401(k) loans allow borrowing against your account without penalties if repaid on time.
Rolling over a 401(k) to another retirement account avoids penalties if completed within 60 days.
The $23,760 Social Security bonus most retirees completely overlook ›

401(k)s are incentivized plans to help Americans save for retirement. The government provides tax breaks to encourage you to contribute, but also enforces certain rules to discourage you from taking distributions before retirement. In some cases, taking distributions early can cost you a 10% penalty in addition to the ordinary income taxes you'll owe on withdrawn funds.

Let's look at all the approved ways you can take money out of a 401(k) and the penalties you'll incur if your early distributions don't fall within one of those exceptions.

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An infographic outlining how to withdraw money from your 401(k). — Image source: The Motley Fool.

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Adjusted Gross Income (AGI)

An amount that takes your total, or gross income, and makes certain adjustments to determine your income for certain tax break qualifications.

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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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