When Can You Withdrawal From 401k

Generally, you can withdraw funds from your 401(k) without penalty when you reach age 59½ or when you leave your job after age 55. However, if you withdraw funds before you reach age 59½ and are still employed, you may have to pay a 10% early withdrawal penalty in addition to income taxes. There are some exceptions to these rules, such as if you become disabled, have certain medical expenses, or if you need to make a down payment on your first home. It’s important to note that withdrawing funds from your 401(k) before retirement can significantly reduce your retirement savings.

Reaching Age 59 1/2

Once you reach age 59 1/2, you can withdraw money from your 401(k) without paying a 10% early withdrawal penalty. However, you may still have to pay income tax on the withdrawal.

  • If you leave your job at age 55 or older, you can take penalty-free withdrawals from your 401(k) immediately.
  • If you leave your job before age 55, you will have to wait until you reach age 59 1/2 to take penalty-free withdrawals.

If you withdraw money from your 401(k) before age 59 1/2, you will have to pay a 10% early withdrawal penalty, in addition to any income tax that you owe. The early withdrawal penalty is designed to encourage people to save for retirement and not to withdraw money from their 401(k)s before they retire.

AgeCan withdraw without penalty?
55 or olderYes, if you leave your job
Under 55No

Leaving Your Job

Leaving your job presents both opportunities and obstacles when it comes to accessing your 401(k) funds. Understanding the rules and potential implications is crucial to make informed decisions regarding your retirement savings.

  • Age 55 or Older: Individuals aged 55 or older who leave their job can withdraw funds from their 401(k) without facing an early withdrawal penalty. However, income taxes still apply.
  • Age 59½ or Older: Upon reaching age 59½, regardless of employment status, you can withdraw funds from your 401(k) without penalty. Taxes will apply to withdrawals.
  • Hardship Withdrawal: In certain circumstances, such as medical emergencies or unavoidable financial hardships, you may be able to make a hardship withdrawal from your 401(k) before age 59½. However, there may be taxes and penalties involved.
  • Employer Restrictions: Some employers restrict 401(k) withdrawals until you reach a certain age or service period. Check with your plan administrator to determine any applicable restrictions.

When withdrawing from your 401(k), consider the following factors:

OptionAge RequirementTax Implications
Regular Withdrawal59½ or olderYes, income tax applies
Age 55 Rule55 or older after leaving jobYes, income tax applies
Hardship WithdrawalBefore age 59½, with specific conditionsYes, income tax and 10% penalty
LoanVaries by planNo, if repaid within 5 years



If you become disabled and unable to work, you may be able to withdraw funds from your 401(k) plan. To qualify, you must meet the following criteria:

  • You must be unable to engage in any substantial gainful activity due to a physical or mental impairment that is expected to last for at least 12 months.
  • You must have a doctor’s certification of your disability.

Medical Expenses

You may also be able to withdraw funds from your 401(k) plan to pay for certain medical expenses. These expenses include:

  • Medical care
  • Prescription drugs
  • Dentistry
  • Vision care

To qualify for a medical expense withdrawal, you must meet the following criteria:

  • The medical expenses must be unreimbursed.
  • The medical expenses must exceed 7.5% of your adjusted gross income.
Type of WithdrawalEligibility Criteria
Disability Withdrawal
  • Unable to engage in substantial gainful activity
  • Expected to last for at least 12 months
  • Doctor’s certification of disability
Medical Expense Withdrawal
  • Medical expenses must be unreimbursed
  • Medical expenses must exceed 7.5% of adjusted gross income

Thanks for reading, everyone! As always, this information is for educational purposes and should not be taken as financial advice. If you want to learn more about this topic, you can check out our other articles on 401(k)s. And if you have any specific questions about your own 401(k), we recommend speaking with an advisor. In the meantime, take care and we’ll see you again soon with more money-saving tips!