401(k) Early Withdrawal Calculator: What Cashing Out Really Costs (2026)
An early 401(k) withdrawal costs you federal income tax at your top bracket, state income tax, and a 10% penalty before age 59½. Together they often take a third of the money. The 20% your plan withholds usually isn’t the whole bill, and the growth you give up can cost more than the taxes.
On this page
Work out your cost
Estimates for pre-tax 401(k) money, using 2026 federal brackets and the standard deduction (IRS Rev. Proc. 2025-32; IRS Notice 2025-67). The 10% penalty is IRC §72(t); withholding is IRC §3405. State tax is treated as a flat rate. Roth money and after-tax contributions are taxed differently, and credits, deductions phasing out, and health-insurance subsidies can make the real cost higher. Growth figures are in today’s dollars, before the tax you would pay when you eventually took the money out.
A worked example
These are the calculator’s starting numbers. You’re 45, single, earn $60,000, live in a state with a 5% income tax, and cash out $20,000 after leaving a job.
| Amount taken out | $20,000 |
| Federal income tax: the $20,000 stacks on top of your $43,900 of taxable income and pushes $13,500 of it into the 22% bracket | −$3,750 |
| State income tax at 5% | −$1,000 |
| 10% early-withdrawal penalty | −$2,000 |
| What you keep | $13,250 |
Tax and penalty take $6,750, about 34% of the withdrawal. Left invested for 20 more years at 5% a year after inflation, the same $20,000 would likely be about $53,000 in today’s dollars.
What goes into the cost
Federal income tax. Pre-tax 401(k) money is ordinary income in the year you take it out. It’s added on top of your other income, so it’s taxed at your highest rates, and a large withdrawal can push part of your income into the next bracket. That’s why the calculator asks for your other income rather than a single tax rate.
State income tax. Most states tax 401(k) withdrawals like wages. Nine states have no tax on this income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. California adds its own 2.5% tax on early distributions, on top of its regular income tax.
The 10% penalty. Before age 59½, the IRS adds a 10% additional tax on the taxable amount (IRC §72(t)). Some exceptions remove it, and the full list of penalty exceptions covers each one. The rule of 55 is the one most people who leave a job in their late 50s can use.
Growth you give up. Money that comes out stops compounding. The calculator shows a range of returns, not a single line, because nobody knows the real rate. All growth figures are in today’s dollars.
Why the check is bigger than what you keep
When you cash out after leaving a job, the plan must withhold 20% for federal income tax (IRC §3405(c)). The penalty isn’t withheld at all. You pay it with your return on Form 5329. For a hardship withdrawal, the default withholding is 10%. So in the example above, the check is $16,000, but you still owe about $2,750 more when you file. Set that money aside before you spend the rest.
Ways to lower the cost
- Take only what you need, and split a large withdrawal across two tax years if you can wait until January.
- Check whether a 401(k) loan would cover the need. A loan has no tax or penalty if you repay it on schedule.
- If you’ve already left the job, roll the rest over rather than cashing out the whole balance.
- If you’re 55 or older and leaving your job, leave the money in the plan until you’ve taken what you need. The rule of 55 doesn’t follow it to an IRA.
- For a small, one-off emergency, the $1,000 emergency withdrawal avoids the penalty.
Frequently asked questions
How much tax will I pay on a $10,000 401(k) withdrawal?
It depends on your other income. For a single filer earning $60,000 in a 5% state, a $10,000 withdrawal before 59½ costs about $1,550 in federal tax, $500 in state tax and a $1,000 penalty, leaving about $6,950. Enter your own numbers above for a closer figure.
Is the 20% withheld the total tax on a 401(k) withdrawal?
Usually not. The 20% is a prepayment toward federal income tax only. It doesn’t cover the 10% penalty or state tax, and if your bracket is above 20% it doesn’t cover the federal tax either. The difference is due when you file your return for that year.
Does the calculator work for Roth 401(k) money?
No. It assumes pre-tax money. Roth contributions come back tax-free, and earnings are taxed only when a withdrawal isn’t qualified. The penalty page explains how the 10% applies to each type of money.
Related reading
- The 10% penalty and every exception
- Hardship withdrawals: who qualifies
- Age 59½: when the penalty ends for good
Sources: IRC §72(t) · IRC §3405 · IRS Rev. Proc. 2025-32 (2026 brackets) · IRS Form 5329 · Cal. Rev. & Tax. Code §17085