what are the penalties for withdrawing from a 401k

If you withdraw money from your 401(k) before you reach 59 ½, the IRS usually assesses a 10% tax as an early distribution penalty. This means that in addition to paying ordinary income tax on the withdrawn amount, you may have to give the government 10% of the withdrawal amount. For example, if you withdraw $10,000 from your 401(k) before age 59 ½, you may have to pay $1,000 as a penalty in addition to income tax on that money. However, there are some exceptions that allow for penalty-free withdrawals, such as certain types of hardships, higher education expenses, buying a first home, total and permanent disability, and separation from service at age 55 or older from the employer plan at the job you are leaving. It is important to note that penalty-free does not mean tax-free, and you may still have to pay income tax on the withdrawn amount.