Withdrawing Early from Your 401k Can Lead to Penalties
The entire purpose for the 401k is to make a tax free plan which can help you save for your retirement. The government wants you to grow the money within the 401k plan, within some limits, however the money is intended to be maintained and grown. That is why early withdrawals from the 401k are generally prohibited.
Overall, if you withdraw money earlier than your retirement, then you will be penalized. For instance, you must leave your money in the 401k until you reach the age of fifty years old and a half. Any withdrawals before this age means that you will have to pay regular income taxes on the withdrawn amount, and you will also receive a ten percent penalty. Nevertheless, there are some exceptional ways to withdraw money earlier without the ten percent penalty, such as the payment of medical expenses or orders from a court.