401(k) early withdrawal calculator: penalty and tax

When you withdraw before 59½, the IRS, the federal tax agency, adds a 10% extra tax on the taxable amount. Most people just call this the penalty. It stacks on top of ordinary income tax.

Whatever you withdraw also gets counted as income that year. It is taxed at your federal bracket, the rate on the top part of your income for the year. Your state might tax it too, although a few states charge no income tax at all.

If the plan sends the money straight to you, it must set aside 20% to cover federal tax. People call this withholding: the plan hangs on to part of the withdrawal and forwards it to the IRS as an advance payment toward your tax bill.

That 20% is not what you finally owe. Your real bill hinges on your bracket, the 10% charge, and state tax, so at filing time you might owe extra or get money refunded.

The IRS spells out cases where the 10% charge is waived. Regular income tax on the withdrawal still applies either way.

• You are 59½ or older.
• You left your job during or after the year you turned 55.
• A child was born to you or adopted by you, and you can take out as much as $5,000 per child.
• You face a sudden personal emergency, and you can take out as much as $1,000 in a single year.
• You are totally and permanently disabled.
• A doctor has certified that your illness is terminal.
• Your out-of-pocket medical bills were large, going beyond a set share of what you earn (7.5% of adjusted gross income, the income figure on your federal tax return).
• You have experienced domestic abuse, and you can take out as much as $10,000 or half of your account, whichever is smaller.
• You lived through a disaster the federal government officially declared, and you can take out as much as $22,000.
• You withdraw equal yearly amounts on a set schedule, continuing for five years at minimum or until you reach 59½, whichever comes later.

It can, if you use a direct rollover. With a direct rollover, your old plan moves the money right into an IRA, so nothing is held back. When it lands in a traditional IRA, a retirement account you set up on your own that stays untaxed until withdrawal, there's no tax and no 10% charge for now.

Whatever you don't roll over gets taxed as income, and it can still lead to the 10% charge if you're under 59½.

Certain IRAs can hold crypto like bitcoin as well. The custodians we compare charge 1% to 2% of each trade in fees for buying. Fidelity warns that crypto prices can change sharply and that crypto has neither federal bank-deposit insurance nor the protection that covers certain losses when a brokerage fails.

Picture taking out $10,000 before age 59½, owing no state tax, and qualifying for no exception, with the full sum taxed at one federal rate. Here is how it plays out at each bracket, with the penalty, the income tax, and what remains in your pocket:

• At the 10% bracket, the penalty comes to $1,000 and the federal income tax to $1,000, so you keep $8,000.
• At the 12% bracket, the penalty comes to $1,000 and the federal income tax to $1,200, so you keep $7,800.
• At the 22% bracket, the penalty comes to $1,000 and the federal income tax to $2,200, so you keep $6,800.
• At the 24% bracket, the penalty comes to $1,000 and the federal income tax to $2,400, so you keep $6,600.
• At the 32% bracket, the penalty comes to $1,000 and the federal income tax to $3,200, so you keep $5,800.
• At the 35% bracket, the penalty comes to $1,000 and the federal income tax to $3,500, so you keep $5,500.
• At the 37% bracket, the penalty comes to $1,000 and the federal income tax to $3,700, so you keep $5,300.

A state income tax means you keep less than these figures.