What is a 401K withdrawal?


Quick Answer

A 401K withdrawal is a withdrawal of money that had previously been deposited into a 401K account. As of 2015, early withdrawals on a 401K account are generally taxed as regular income and can face an additional 10 percent tax penalty if withdrawn before the age of 59 1/2.

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Full Answer

A 401K withdrawal can also come in the form of automatic distributions that are released once a beneficiary is of the appropriate age. This automatic distribution can be delayed until a beneficiary is above the age of 70 1/2, after which a required minimum distribution value must be adhered to. An alternative to an early 401K withdrawal is a loan made using a 401K account as collateral.

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