Cashing Out Early Costs More Than the Sticker Number
A 401(k) or Traditional IRA is built around a trade-off: tax-advantaged growth in exchange for leaving the money alone until age 59 1/2. Break that deal and the IRS adds a 10% early withdrawal penalty on top of ordinary income tax, unless you qualify for a specific exception. The penalty and tax only apply to money that hasn't been taxed yet, which usually means your pre-tax contributions and all investment earnings.
If you ever made non-deductible (after-tax) contributions, that portion is your basis, and it was already taxed once, so it's not taxed again on withdrawal. This calculator subtracts your basis from the withdrawal amount to find the taxable base, then applies the 10% penalty plus your estimated federal and state income tax rates to that base, showing exactly what you'd walk away with after all three costs.
Basis tracking depends on accurate records (Form 8606 for IRAs, or your plan statements for a 401(k)), and your actual marginal tax rate depends on your full income picture for the year. Treat the result as an estimate and confirm your specific numbers with a tax professional before withdrawing.
Frequently Asked Questions
Withdrawals before age 59 1/2 generally owe a 10% penalty plus your ordinary federal and state income tax rate on the taxable portion, unless an IRS exception applies.
No. Non-deductible (after-tax) contributions were already taxed once and aren't taxed again. Only pre-tax contributions and earnings are taxable.
Yes. Common exceptions include certain medical expenses, a first-time home purchase for IRAs (up to $10,000), disability, and some hardship situations.
※ Tax rates and rules can change. Results are estimates only, not tax advice.