What Is The Impact Of Early Withdrawal From My 401(k)?

Even if your retirement time is not anytime close, you may be tempted to withdraw your hard-earned savings earlier than usual to spend on something or invest in a commodity that you require currently. While it is not impossible for an early withdrawal from your 401K account, there is a penalty that comes with it. Withdrawing money before you reach the age of 59 ½ makes you eligible to pay not only the basic income tax on the amount withdrawn but also an additional penalty tax of 10%. Hence, in lieu of trying to get your hands on funds earlier, you might end up spending more on taxes.