Explain it like I’m 5
A 401(k) is a retirement savings account from your job. When you put money in, you didn’t pay income tax on it yet. So when you take money out, the government collects that tax then.
If you take money out before age 59½, there’s usually an extra 10% penalty — a fine for opening your retirement piggy bank too early. Your state may want a slice too.
This calculator adds it all up so you can see how much of a withdrawal you’d really keep. Spoiler: taking money out early can cost a third or more of it.
Words you’ll see, in plain English
- 401(k)
- A retirement savings account you get through your job. Money goes in before tax, grows, and is taxed when you take it out.
- Tax bracket (marginal rate)
- Income is taxed in layers. Each layer has its own rate, and your bracket is the rate on your top layer — not on all your money.
- Effective tax rate
- The share of the money that actually went to tax, all layers counted together.
- Standard deduction
- A chunk of income the government lets you earn tax-free each year before income tax starts.
- Early withdrawal penalty
- A fee for taking your money out before you promised to.
- Filing status
- Which group you file taxes as — single, married filing jointly, married filing separately or head of household. It changes your tax brackets.
- RMD (required minimum distribution)
- The minimum the IRS makes you take out of most pre-tax retirement accounts each year once you reach a certain age (73 or 75).
More money words explained simply in our glossary.
How 401(k) withdrawals are taxed
- Federal income tax. Money from a traditional 401(k) has never been taxed, so withdrawals count as ordinary income. They are stacked on top of your other income, which can push part of the withdrawal into a higher bracket.
- The 10% early-withdrawal penalty. Before age 59½ you generally owe an extra 10% of the amount withdrawn, unless an exception applies.
- State income tax. Most states tax 401(k) withdrawals as income; a handful have no income tax, and some exempt part of retirement income.
How the calculator works
It works out your federal tax twice — once on your other income alone and once with the withdrawal added — using the2026 brackets and the standard deduction ($16,100 single,$32,200 married filing jointly, $24,150 head of household). The difference is the federal tax caused by the withdrawal. It then adds the 10% penalty if you are under 59½ and no exception applies, plus your state rate on the withdrawal.
Federal tax on withdrawal = tax(other income + withdrawal − deduction) − tax(other income − deduction)
Example: a $20,000 early withdrawal
A single 45-year-old with $70,000 of other income withdraws $20,000 and lives in a state with a 5% income tax. The whole withdrawal lands in the 22% federal bracket, so it adds $4,400 of federal tax. The 10% penalty is $2,000 and state tax is $1,000. Total: $7,400 — they keep about $12,600, losing 37% of the withdrawal.
Before you withdraw early
- Check for a 401(k) loan. Many plans let you borrow from your balance and repay yourself with interest, without tax or penalty — but leaving your job can make the loan due quickly.
- Check the exceptions. The rule of 55, disability, medical expenses and several others remove the 10% penalty.
- Spread it out. Splitting a large withdrawal across two tax years can keep more of it in a lower bracket.
- Count the lost growth. Money withdrawn at 45 gives up 20+ years of compounding — try the Roth IRA calculator or Coast FIRE calculator to see what it could have become.
What this calculator doesn’t include
Itemized deductions, tax credits, the taxation of Social Security benefits, the 3.8% net investment income tax and local income taxes are not modeled. Required minimum distributions, which generally start at age 73 (75 if you were born in 1960 or later), are taxed the same way as other withdrawals. Tax figures are for 2026.
Frequently asked questions
How much tax will I pay on a 401(k) withdrawal?
Withdrawals from a traditional 401(k) are taxed as ordinary income, at your federal bracket rate plus any state income tax. If you are under 59½ you generally also owe a 10% additional tax, unless an exception applies. The calculator adds the withdrawal to your other income to find the extra federal tax it causes.
Why was 20% withheld from my 401(k) withdrawal?
When an eligible rollover distribution is paid directly to you, the plan must withhold 20% for federal income tax. That is a prepayment, not the final bill: depending on your bracket and any penalty, you may owe more or get some back when you file. Moving the money in a direct rollover to an IRA or another plan avoids the withholding.
At what age can I withdraw from my 401(k) without penalty?
Generally 59½. Under the “rule of 55”, if you leave your job in or after the year you turn 55 (50 for certain public safety employees), withdrawals from that employer’s plan are also free of the 10% penalty. Income tax still applies either way.
What are the exceptions to the 10% early withdrawal penalty?
Common exceptions include the rule of 55, total and permanent disability, substantially equal periodic payments, unreimbursed medical expenses above 7.5% of AGI, distributions under a qualified domestic relations order, qualified birth or adoption distributions (up to $5,000), and a once-a-year emergency expense distribution of up to $1,000. Rules and plan availability vary; see the IRS list of exceptions to tax on early distributions.
Are Roth 401(k) withdrawals taxed?
Qualified Roth 401(k) withdrawals — generally after age 59½ and at least five years after your first Roth contribution to the plan — are tax-free. Non-qualified withdrawals can make the earnings portion taxable and subject to the penalty. This calculator is for traditional (pre-tax) 401(k) money.
These results are estimates for education only, based on the assumptions you enter. They are not financial, investment or tax advice. Real returns, rates and taxes vary. See our methodology anddisclaimer.