How it works
Withdrawing from a tax-deferred account before age 59.5 usually triggers a 10% penalty plus income tax on the taxable portion. This estimates both and what you'd actually keep — set the penalty to 0 if you qualify for an IRS exception.
Who this is for
Anyone considering tapping a retirement account before 59.5 for an emergency or major expense, who wants to know the real cost before pulling the money.
Worked example
Withdrawing $50,000, all of it taxable, in a 22% bracket with the standard 10% penalty: $5,000 goes to the penalty, $11,000 to income tax, leaving about $34,000 in your pocket — roughly a third of the withdrawal lost to penalty and tax combined.
Frequently asked questions
Can the 10% penalty be avoided? Yes, in specific IRS-recognized cases — disability, certain medical costs, a first home, higher education, and a few others. See the early withdrawal penalty guide for the full list.
What if I'm 55 and leaving my job? The Rule of 55 can waive the penalty on that specific employer's 401(k) — worth checking before assuming the 10% applies.
Is there a penalty-free way to take structured withdrawals early? The 72(t) SEPP calculator covers that path, though it requires committing to a fixed schedule for years.