Are There Penalties for Withdrawing From a 401k
There are potential penalties for withdrawing funds from a 401k before the age of 59.5. The primary penalty is an early withdrawal penalty of 10% on the withdrawn amount. This penalty is assessed by the Internal Revenue Service (IRS) and is applied to both federal and state taxes. The penalty does not apply if the funds are used for certain qualified expenses, such as a down payment on a first home, medical expenses, or higher education costs.