When Can I Withdraw Funds From My 401(k) Without Penalties?

Avoid penalties by knowing the age-related rules.

Can I withdraw from my 401(k) without a penalty? You can under age 55 only with a loan or hardship withdrawal, or by rolling it over into an IRA. You can between age 55 and 59 and a half only if you are retired and as long as you didn't retire before the year you turned 55. You can between age 59 and a half and age 72, but if you're still working you probably can't withdraw from your current employer's 401(k). And after age 72 you are required to take the minimum distributions.
Photo:

The Balance / Catherine Song

Different rules apply at different ages when it comes to accessing your 401(k) without penalties. The younger your age, the fewer options you have. This is especially the case if you're not yet retired. It can be frustrating if you need the money right now for non-retirement expenses, but the idea of any retirement plan is to ensure that you'll have income when you retire.

Key Takeaways

  • You can take a loan from your 401(k) to buy a home or to help pay for college, but you must pay the money back.
  • You can take a hardship withdrawal from your 401(k) if the plan is held by your employer.
  • You can begin to withdraw from your 401 (k) without penalty when you reach age 55 through age 59½.
  • You can't take loans from old 401(K) accounts.
  • Your plan administrator will let you know whether they allow an exception to the required-minimum-distribution rules if you're still working at age 72.

Withdrawing From Your 401(k) Before Age 55

You have two options if you're younger than age 55 and if you still work for the company that manages your 401(k) plan. This assumes that these options are made available by your employer.

You can take a 401(k) loan if you need access to the money, or you can take a hardship withdrawal, but you can only do this from a current 401(k) account that's held by your employer. You can't take loans out on older 401(k) accounts.

You can roll the funds over to an IRA or another employer's 401(k) plan if you're no longer employed by the company, but these plans must accept these types of rollovers.

Note

Think twice about cashing out because you'll lose valuable creditor protection that stays in place while you keep the funds in your 401(k) plan at work. You could also be subject to a tax penalty, depending on why you're taking the money and your age.

Withdrawing Funds Between Ages 55 and 59½

Most 401(k) plans allow for penalty-free withdrawals starting at age 55. You must have left your job no earlier than the year in which you turn age 55 to use this option. You must leave your funds in the 401(k) plan after leaving your job in order to access them penalty-free, but there are a few exceptions to this rule. This option makes funds accessible as early as age 50 for many police officers, firefighters, and EMTs.

Make sure you understand the rules around the age requirement for penalty-free withdrawals. The age 55 rule won't apply if you retire in the year before you reach age 55, and your withdrawal would be subject to a 10% early withdrawal penalty tax in this case.

The age-55-and-up retirement rule won't apply if you roll your 401(k) plan over to an IRA. The earliest age to withdraw funds from a traditional IRA account without a penalty tax is 59½.

Note

You might retire at age 54 thinking that you can access funds penalty-free in one year, but it doesn't work that way. You must wait one more year to retire for this age rule to take effect.

Withdrawing From Age 59½ to Age 72

Access to your 401(k) funds after age 59½ depends on whether you're still working.

Have You Retired?

You can access your funds at age 59½ without paying an early-withdrawal penalty if you've retired and you ended your employment after you reached age 55. You must still have funds in your plan in order to do so, and the rules are the same if you've rolled your 401(k) funds into an IRA. Age 59½ is the earliest you can withdraw funds from an IRA account and pay no penalty.

Are You Still Working?

You can access funds from an old 401(k) plan after you reach age 59½ even if you haven't yet retired. The best idea for old 401(k) accounts is to roll them over when you leave a job. You won't be hit with penalties if you withdraw from your old accounts if you're at least age 59½. But you should check with your human resource department about the rules for withdrawing from your current 401(k) if you're still in the workplace.

Note

Check with your 401(k) plan administrator to find out whether your plan allows what's referred to as an “in-service” distribution at age 59½. Some 401(k) plans allow this, but others don't.

Required Minimum Distributions

Required minimum distributions (RMDs) start at age 72, as of 2022. You must generally begin taking distributions from all of your tax-deferred retirement plans, such as IRAs and 401(k)s when you reach this age. You must take your first RMD by April 1 of the year after you reach 72 if you turned 70½ in the previous year.

Your plan might offer an exception to these mandatory distribution rules if you're still employed by the company that manages your 401(k), and if you're not the owner of the business. Check with your plan administrator to determine whether the company allows an exception to the required minimum distribution rules if you're still working at age 72.

Frequently Asked Questions (FAQs)

When can I take money out of a 401(k) without facing a penalty?

You can withdraw money penalty-free from your 401(k) at age 59½. That's the limit set by federal law, but keep in mind that your situation could be complicated if you continue working into your 60s. Check with your employer to see whether you're allowed to withdraw from your 401(k) while working.

How do you withdraw money from your 401(k) after reaching age 59½?

Withdrawing money from a 401(k) account in retirement is the same process as withdrawing money from any other type of account. You can simply request a withdrawal from the institution that holds the account. You may be able to withdraw money as a check, or you can transfer the funds to a bank account.

Was this page helpful?
Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "401(k) Resource Guide - Plan Participants - General Distribution Rules."

  2. IRS. "Retirement Topics - Termination of Employment."

  3. IRS. "Topic No. 558 Additional Tax on Early Distributions From Retirement Plans Other Than IRAs."

  4. IRS. "Retirement Topics - Exceptions to Tax on Early Distributions."

  5. IRS. "Retirement Plan and IRA Required Minimum Distributions FAQs."

Related Articles