What happens if money is withdrawn before age 59½?
Access to 401(k) plan money is restricted. The government allows participants to defer taxes on contributions and earnings with the expectation that the money will be used at retirement. If money is withdrawn before age 59½, a 10 percent early withdrawal penalty may apply. Also, if the amount withdrawn is not directly rolled into an IRA or another qualified retirement plan, 20 percent may be withheld for taxes. Some plans permit loans. Refer to your summary plan description for loan options.
