What happens if you make an early withdrawal from your 401k?

Answer by  jmrdflcarpenter (515)

They penalize you. They charge you early withdraw fees, penalty fees, and I think they may even make you pay interest on what you take out. What happens is if you make an early withdraw is you usually only end up with half of what you took otut.

Answer by  Laura47 (138)

You will have to pay taxes on that money, in addition to a penalty for early withdrawal. Check with your financial adviser or planner to make sure this won't hurt you in the long run.

Answer by  PHOAT (645)

Since most are done pre-tax, you will have to pay income taxes on the money, you'll also get hit with a penalty. See if you can borrow against it instead.

Answer by  sc1234 (1319)

This is generally frowned upon because you will be heavily penalized by the US government for taking the money out early. All of the taxes that would have been accrued on the money since you made it will be charged against your 401(k) balance. If possible, I would seek another option.