If you tap into your 401(k) early (before you’re at least 59 ½) you’ll likely face a 10% tax penalty. You’ll also have to pay regular income tax on your withdrawal if it’s a standard 401(k).

There are a few ways to tap into your 401(k) early without the tax consequences:

  • Hardship withdrawal: If you’re facing a financial hardship, your plan may allow you to take a hardship withdrawal early, without the 10% penalty. Examples of hardships include the purchase of your primary home, prevention of foreclosure on your primary home, medical or funeral expenses, etc.
  • 401(k) loan: Some plans allow you to take out a loan from your 401(k) of up to 50% of the balance without being taxed. In most cases, you’ll have to repay the loan within five years, and any interest you pay will go back into your account.
  • Roll over the balance: If you are no longer contributing to your 401(k) because you have changed jobs or for any other reason, you can roll over your balance into another qualifying retirement account to avoid the penalty.

If you need to tap into your 401(k) early, it’s important to understand the potential tax consequences. Don’t be caught off guard. Get the tax answers you need. Our Tax Pros are here all year and ready to help. Book your appointment today.

Sharon Brucker, CPA Senior Tax Research Analyst Published on: August 28, 2025
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.