What age can I take out my 401k and how will it be taxed?
What age can I take out my 401k and how will it be taxed?
In general you must be 59-1/2 years of age to make a withdrawal without incurring penalties. Withdrawals from your 401(k) are almost always taxed as ordinary income for both state and federal taxes - the exception is if you have any "after-tax" contributions to the plan those are withdrawn tax-free, but any earnings or gains associated with these contributions are taxed as ordinary income. Also, if you are under 59-1/2 years of age you most likely will have to pay a 10% penalty in addition to the ordinary income taxes (assuming you don't start a regular withdrawal plan using "substantially equal" withdrawals). If you are under 59-1/2 and need some of the money from your 401(k), you are better off taking a loan from your plan rather than a withdrawal, if your plan allows.
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