IRC §72(t) · 10% Additional Tax · Age 59½ · Form 5329 · TY 2025 & 2026
Early Withdrawal Penalty Calculator
See the real cost of pulling money from a 401(k), 403(b), or IRA before age 59½. Enter the amount, your age, and your bracket to get the 10 percent penalty under IRC §72(t), the income tax, the total federal cost, and the net you actually keep. Handles the SIMPLE IRA 25 percent rate, Roth ordering, and the §72(t) exceptions.
IRC §72(t) - Early Distribution Cost
The year you take the distribution. The 10 percent rate and the age 59½ rule are the same for both years.
A SIMPLE IRA taken within its first two years carries a 25 percent penalty. A Roth IRA penalizes only the taxable portion (earnings or recent conversions); contributions come out first, free.
The penalty applies only before age 59½. Enter your age in whole years; the precise cutoff is 59 and a half.
The total dollar amount you are withdrawing from the account.
For a traditional IRA or 401(k), this equals the full amount. For a Roth IRA, enter only the taxable part (earnings or converted dollars); contributions are not taxed or penalized.
Used to estimate the federal income tax. A pre-tax distribution is ordinary income stacked on top of your other income.
Disability, death, SEPP, medical over 7.5% of AGI, the rule of 55, a $10,000 first home (IRA), and others waive the 10 percent penalty. They do not waive the income tax.
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Enter the amount, your age, and your bracket to see the penalty, the tax, and what you keep
Early Withdrawal Cost
Penalty per IRC §72(t): 10 percent of the taxable amount of a distribution taken before age 59½ (25 percent for a SIMPLE IRA in its first two years), on top of regular income tax. The income tax shown is an estimate at the marginal rate you choose; your actual tax depends on your full return. State tax, after-tax basis, and the precise Roth five-year rules are not modeled here.
Want the full rulebook - every §72(t) exception, the rule of 55, SEPP, the Roth ordering rules, the SIMPLE 25 percent trap, and Form 5329 reporting? Read the companion guide.
Taking money out of a 401(k), 403(b), or IRA before age 59½ usually costs a 10 percent penalty under IRC §72(t) on the taxable amount, on top of the regular income tax. A $50,000 401(k) withdrawal at age 45 in the 22 percent bracket loses $5,000 in penalty and about $11,000 in income tax, leaving roughly $34,000 - an effective hit near 32 percent. A SIMPLE IRA in its first two years is penalized at 25 percent. Roth IRA contributions come out free; only the taxable earnings are penalized. Exceptions such as disability, the rule of 55, and SEPP waive the penalty but not the income tax.
Key Takeaways
10 percent penalty. IRC §72(t) adds 10 percent to the taxable amount of any early distribution, separate from income tax.
Age 59½ gate. The penalty applies only before age 59½; after that, pre-tax distributions are still ordinary income but carry no penalty.
It stacks on income tax. A pre-tax withdrawal is fully taxable, so the combined cost is commonly 30 to 45 percent before state tax.
SIMPLE IRA, first 2 years. The penalty is 25 percent, not 10 percent, under §72(t)(6).
Roth ordering helps. Contributions come out first, tax-free and penalty-free; only earnings (and recent conversions) are penalized.
Exceptions waive the penalty only. Disability, death, SEPP, medical over 7.5% of AGI, the rule of 55, and others remove the 10 percent but leave the income tax.
Account type matters. The $10,000 first-home and education exceptions are IRA-only; the rule of 55 and QDROs are workplace-plan-only.
Report on Form 5329. The additional tax flows to Schedule 2 (Form 1040); use Form 5329 to claim an exception.
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Written by Munib Ur Rehman · Reviewed by Nausheen Shahid (LMN Tax Inc.) · Tax Years 2025 & 2026 · Last Reviewed: June 2026
2026 and 2025 Early Withdrawal Rules
Early Distribution Additional Tax - Key Rules
Item
Tax Year 2026
Tax Year 2025
Penalty rate (general)
10%
10%
SIMPLE IRA, first 2 years
25%
25%
Age the penalty stops
59½
59½
Applies to
Taxable amount
Taxable amount
On top of income tax
Yes
Yes
First-home exception (IRA)
$10,000 lifetime
$10,000 lifetime
Birth or adoption exception
$5,000
$5,000
Emergency personal expense
$1,000
$1,000
Reported on
Form 5329 / Schedule 2
Form 5329 / Schedule 2
The early distribution rules are set by IRC §72(t) and are unchanged for 2025 and 2026. SECURE 2.0 added several penalty exceptions (the $1,000 emergency expense, the domestic abuse distribution, and the terminal illness exception) effective for distributions after December 31, 2023. Sources: IRC §72(t), IRS Topic 557, IRS Topic 558, and IRS Publication 590-B.
How the Calculation Works
The tool applies IRC §72(t) the way Form 5329 does: the 10 percent penalty falls on the taxable amount of an early distribution, and the income tax is figured separately. For the full set of exceptions and the planning rules, see the Early Withdrawal Penalty Guide.
Step 1: Identify the Taxable Amount Confirmed
The penalty and the income tax both apply to the part of the distribution included in gross income. For a pre-tax 401(k) or traditional IRA, that is the whole withdrawal. For a Roth IRA, contributions come out first tax-free and penalty-free, so only the earnings or recently converted dollars are taxable. You enter the taxable portion directly.
Step 2: Check the Age 59½ Gate Confirmed
If you are at least 59½ when you take the distribution, there is no penalty, and the tool returns a zero penalty while still estimating the income tax. Below 59½, the penalty applies unless a §72(t) exception covers the distribution.
Step 3: Apply the Penalty Rate Confirmed
The general rate is 10 percent of the taxable amount. A SIMPLE IRA distribution taken within the plan's first two years is the exception: it is penalized at 25 percent under §72(t)(6). If you select an exception, the penalty is set to zero.
Step 4: Estimate the Income Tax Confirmed
A pre-tax distribution is ordinary income. The tool multiplies the taxable amount by the marginal rate you select. Because the distribution stacks on your other income, a large withdrawal can push part of it into the next bracket; pick the rate that reflects where the money lands.
Step 5: Total the Cost and the Net Confirmed
Total federal cost equals the penalty plus the estimated income tax. The net amount you keep is the distribution minus that total. The effective rate is the total cost divided by the gross distribution, which shows how much of the withdrawal is consumed by federal tax and penalty before any state tax.
Real-World Examples
Example 1 - $50,000 401(k) at age 45, 22% bracket
Distribution / taxable$50,000
10% penalty$5,000
Income tax (22%)$11,000
Net you keep$34,000
Effective rate32.0%
Example 2 - SIMPLE IRA in first 2 years, $10,000 at age 40, 12%
Distribution / taxable$10,000
25% penalty$2,500
Income tax (12%)$1,200
Net you keep$6,300
Effective rate37.0%
Example 3 - Roth IRA $15,000 (only $3,000 earnings) at 40, 22%
Distribution$15,000
Taxable earnings$3,000
10% penalty (on earnings)$300
Income tax (22%)$660
Net you keep$14,040
Example 4 - Traditional IRA $40,000 at age 62, 22% (no penalty)
Distribution / taxable$40,000
Penalty (over 59½)$0
Income tax (22%)$8,800
Net you keep$31,200
Example 5 - $20,000 IRA at 50, disability exception, 24%
Distribution / taxable$20,000
Penalty (exception applies)$0
Income tax (24%)$4,800
Net you keep$15,200
Example 6 - $30,000 401(k) at age 54, 24% (rule of 55 not yet)
Distribution / taxable$30,000
10% penalty$3,000
Income tax (24%)$7,200
Net you keep$19,800
Practitioner Insight (LMN Tax Inc.)
LMN Tax Inc. - Planning Notes
The number that shocks clients is not the 10 percent penalty, it is the combined hit. A pre-tax distribution is ordinary income, so a client in the 24 percent bracket who pulls $40,000 from a 401(k) at 50 loses $4,000 to the penalty and $9,600 to federal income tax, plus state tax, and keeps barely $25,000. We always run the gross-up: if you actually need $25,000 in hand, you have to withdraw far more, which makes a 401(k) loan or a home equity line look cheap by comparison.
The rule of 55 is the most missed escape hatch. If a client separates from service in or after the year they turn 55, distributions from that specific employer's 401(k) are penalty-free, even before 59½. The trap is rolling the 401(k) to an IRA first, which kills the exception. When a client between 55 and 59½ leaves a job, we tell them to leave the money in the plan if they might need it, and only roll over what they will not touch until 59½.
SEPP, the substantially equal periodic payments exception under §72(t)(2)(A)(iv), is powerful but unforgiving. It lets you take penalty-free payments before 59½, but you must continue them for at least five years or until 59½, whichever is longer. Break the schedule early and the IRS retroactively applies the 10 percent penalty to every payment plus interest. We only set up a SEPP when a client truly needs a steady stream for years, never for a one-time need.
For Roth IRAs, the ordering rules are the client's friend. Contributions always come out first, tax-free and penalty-free, because the tax was already paid. We have clients who panic about a Roth withdrawal when in fact they are only touching their own contributions and owe nothing. The penalty only reaches the earnings, and only before 59½ and the five-year mark. Knowing which dollars you are pulling changes the answer entirely.
When This Calculator Does Not Cover Your Situation
457(b) governmental plans. Distributions from a governmental 457(b) are generally not subject to the 10 percent early withdrawal penalty at all, though amounts rolled in from a 401(k) or IRA keep their penalty character. Treat a pure 457(b) withdrawal as penalty-free.
Partial exceptions. Some exceptions cap the penalty-free amount (for example, $10,000 lifetime for a first home, the medical expense over 7.5% of AGI floor). This tool treats the exception as all-or-nothing; if only part of your distribution qualifies, the penalty applies to the rest.
After-tax basis in a pre-tax account. Nondeductible IRA contributions (tracked on Form 8606) make part of each distribution a tax-free return of basis, so the taxable amount and the tax shown here would be overstated.
Roth five-year clocks. The taxability of Roth earnings and converted amounts depends on the five-year rules and your age. Enter only the genuinely taxable portion; the tool does not apply the ordering rules for you.
State tax. Many states tax early distributions and a few add their own penalty. This tool estimates federal tax and penalty only.
Bracket spillover. A large distribution can push part of itself into a higher bracket. The single marginal rate here is an estimate; the income tax calculators handle layered brackets.
Mandatory withholding. A 401(k) distribution generally has 20 percent withheld up front; that is a prepayment of tax, not the final bill, and is separate from the penalty.
Frequently Asked Questions
How much is the early withdrawal penalty on a 401(k) or IRA?
The early withdrawal penalty under IRC section 72(t) is 10 percent of the taxable amount of a distribution taken before age 59 and a half, on top of the regular income tax. For example, a $50,000 401(k) withdrawal at age 45 in the 22 percent bracket costs $5,000 in penalty plus $11,000 in income tax, leaving $34,000, an effective hit of 32 percent. A SIMPLE IRA distribution taken within the plan's first two years carries a higher 25 percent penalty.
At what age does the early withdrawal penalty stop?
The 10 percent additional tax applies only to distributions taken before you reach age 59 and a half. Once you are 59 and a half or older, the penalty no longer applies, although a distribution from a pre-tax account is still ordinary income. The half-year matters: a distribution taken the day before you turn 59 and a half is penalized, while one taken the day after is not.
Is the early withdrawal penalty on top of income tax?
Yes. The 10 percent penalty is an additional tax that stacks on top of the regular income tax you owe on the distribution. A pre-tax 401(k) or traditional IRA withdrawal is fully taxable as ordinary income, and the penalty is added to that. Combined with federal income tax, an early withdrawal commonly costs 30 to 45 percent of the amount taken, before any state tax.
What are the exceptions to the 10% early withdrawal penalty?
IRC section 72(t)(2) waives the 10 percent penalty (not the income tax) for several reasons: total and permanent disability, death, terminal illness, substantially equal periodic payments (SEPP), unreimbursed medical expenses over 7.5 percent of AGI, an IRS levy, a qualified reservist call-up, a $5,000 birth or adoption distribution, a domestic abuse distribution, and a $1,000 emergency personal expense. IRAs add a $10,000 first-home purchase, qualified higher education, and health insurance while unemployed. Workplace plans add separation from service in or after the year you turn 55 and qualified domestic relations orders.
Does the penalty apply to a Roth IRA withdrawal?
Roth IRA contributions come out first and are always tax-free and penalty-free because you already paid tax on them. The 10 percent penalty and income tax apply only to the taxable portion, generally the earnings, when withdrawn before age 59 and a half and before the account is five years old. Converted amounts have their own five-year clock. This calculator lets you enter the taxable portion so the penalty is applied only to that part.
What is the rule of 55?
The rule of 55 lets you take penalty-free distributions from your current employer's 401(k) or 403(b) if you separate from service during or after the calendar year you turn 55 (age 50, or 25 years of service, for qualified public safety employees). It applies only to the plan at the job you left, not to IRAs and not to former employers' plans. Rolling the 401(k) into an IRA forfeits this exception, so check before you roll over if you are between 55 and 59 and a half.
How do I report the early withdrawal penalty?
The 10 percent additional tax is figured on Form 5329, Additional Taxes on Qualified Plans, and carried to Schedule 2 (Form 1040). If your Form 1099-R shows distribution code 1 (early distribution, no known exception) but an exception applies, you file Form 5329 to claim the exception with the correct exception code. If no exception applies and the full distribution is penalized, you can sometimes report the 10 percent directly on Schedule 2 without Form 5329.
Is a SIMPLE IRA early withdrawal penalty higher?
Yes. A distribution from a SIMPLE IRA taken within the first two years of participation carries a 25 percent additional tax instead of 10 percent, under IRC section 72(t)(6). The two-year clock starts on the first day your employer's contributions are deposited to the account. After two years, a SIMPLE IRA early distribution follows the normal 10 percent rule.
What to Do Next
If You Are Thinking About an Early Withdrawal
Run the numbers above to see the true cost, then read the full exception list and the rule of 55 in the Early Withdrawal Penalty Guide before you touch the account.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute tax, legal, or financial advice. The early distribution framework reflects IRC §72(t), IRS Topic 557, IRS Topic 558, and IRS Publication 590-B for tax years 2025 and 2026. The 10 percent additional tax (25 percent for a SIMPLE IRA in its first two years) applies to the taxable amount of a distribution before age 59½ and is in addition to regular income tax; listed exceptions waive the penalty but not the income tax. Governmental 457(b) plans, partial exception caps, after-tax basis, the Roth five-year rules, mandatory withholding, and state tax are not modeled. Consult a qualified tax professional before relying on these figures.