What are the current rules for 401(k) withdrawals?

Typically, you must be at least 59 1/2 to withdraw your 401(k) funds penalty-free. However, younger adults can make penalty-free withdrawals in select circumstances, such as to pay for large medical bills or to recover from economic loss following a federally declared disaster. You will owe ordinary income taxes on your withdrawals if the money comes from a traditional 401(k). Roth 401(k) withdrawals are generally tax-free, provided you're at least 59 1/2 and have had the account for at least five years.

Can I withdraw 100% of my 401(k)?

You can withdraw the full balance of your 401(k) if you're no longer employed by the company. However, if you do this, you'll pay ordinary income taxes on the withdrawal (unless it comes from a Roth 401(k)) plus a 10% early withdrawal penalty if you're under 59 1/2.

How much will I get if I withdraw my 401(k)?

When withdrawing money from a traditional 401(k), plans typically withhold 20% for taxes. You could also face a 10% early withdrawal penalty if you're under 59 1/2 at the time and don't qualify for an exception.

At what age is 401(k) withdrawal tax-free?

Traditional 401(k) withdrawals are never tax-free. You will pay ordinary income taxes on your withdrawal regardless of your age. However, the early withdrawal penalty goes away when you turn 59 1/2. Roth 401(k) withdrawals permit tax-free withdrawals once you're 59 1/2.

Rules for 401(k) Withdrawals

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

By Kailey Hagen – Updated Feb 18, 2026 at 4:41 PM EST | Fact-checked by Parker Hicks

Key Points

Withdrawals from a 401(k) before age 59 1/2 generally incur a 10% penalty plus income taxes.
Penalty-free early withdrawals are allowed for hardships like medical costs or disasters.
At age 73, RMDs are required from traditional 401(k)s but not from Roth 401(k)s per SECURE Act.

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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List of exceptions to the 401(k) early withdrawal penalty

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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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401(k) withdrawal frequently asked questions (FAQs)

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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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