Question: When can you withdraw 401K/IRA?
Answer: 401K and Individual Retirement Accounts were meant to encourage taxpayers to save for retirement. The IRS implemented some restrictions regarding withdrawals of 401K and traditional IRA accounts.
You can withdraw ANYTIME but there are penalties if you have not reached certain age and requirements.
You can withdraw anytime after 59 1/2 without any penalty. If you withdraw early than 59 1/2, the withdrawal is subject to 10% penalty. Plus the withdrawal money is subject to taxable income.
However there are several exemptions if you want to withdraw your 401K without penalty.
- the 401K or IRA distribution is used to pay for your first home
- the 401K or IRA distribution is used to pay for higher eduction
- you become disabled
- you are deceased and the distribution was made to your beneficiary