401k Withdraw Calculator 2022

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What state do you live in?
Age
Gross Income
$
Filing Status

Financial Information

Amount to Withdraw
$
Rate of Return
%

Early Withdrawal Fee Exemptions

Qualified Deductions

Automatic Enrollment
$
Corrective Distributions
$
Equal Payments
$
ESOP
$
Medical
$
Rollovers
$
Results
You Recieve$30,44110%6%23%61%

401k Withdrawal Breakdown

You Withdraw
$50,000.00
Early Penalty Fee:
$5,000.00
State Tax:
$3,000.00
Federal Tax:
$11,559.50
You Receive
$30,440.50

If you do not withdraw $50,000 from 401k account today, you will avoid paying $19,560 in taxes and fees as well as earn interest on your money. Assuming the average rate of return of 7% on your 401k account, if you keep the money in the account, you will have around $53,500 in 1 Year, around $70,128 in 5 Years and around $98,358 in 10 Years.

Forgone Interest as a Result of $50,000 Withdrawal from 401k

401k Withdrawal and Earned Income Distribution Chart

What You Should Know

  • 401k withdrawal may require a 10% early withdrawal fee if the account holder is not eligible for the exemption.
  • 401k withdrawals are taxed as ordinary income, which means that it might be expensive to withdraw from 401k when you have a high gross income.
  • 401k withdrawal calculator allows you to assess your eligibility for an early withdrawal fee exception and to estimate how much taxes you will have to pay on your withdrawal.

About the 401k Withdrawal Calculator

This calculator allows you to make an informed decision about funds withdrawal from a 401k account based on expected expenses and taxes associated with the transaction as well as the opportunity cost of withdrawing the money prematurely. It is important to understand what costs apply to your situation before making a withdrawal because they can add up to more than half of the withdrawal amount. In addition to that, withdrawing money from 401k means that it will not compound over time, which leads to forgiven interest in the future.

This calculator provides an intuitive way to calculate the approximate amount of money you should expect to receive from a 401k withdrawal given your eligibility factors as well as current income. Some people may be eligible to withdraw the money from a 401k without paying an early withdrawal fee, and the calculator allows you to see whether you meet any eligibility requirements for the early withdrawal fee exemption. It is important to note that even if you are exempt from the early withdrawal penalty, you will still have to pay income tax on your withdrawal.

The following list of inputs provides an overview of the variables and how they affect the 401k withdrawal results.

Personal Information

The inputs in personal information relate to the 401k account holder. It could be the case that a beneficiary of the account holder who is not an account holder may need to calculate the possible withdrawal amount. The information provided in this section should be of the primary account holder.

  • Date of Birth or Age

  • You can choose between inputting the date of birth or the age in full years and full months. This variable is needed to see whether a person is qualified to be exempt from early withdrawal penalty based on age. An account holder can be exempt from early withdrawal penalty as soon as they reach 59 and a half years old.

  • Gross Income

  • Taxable annual income of the account holder for the year of 401k withdrawal. This value is used to calculate federal and state taxes owed on the income as well as estimate the tax rate on 401k withdrawal.

  • Filing Status

    Tax filing status of the account holder. There are 4 types to choose from: single filer, married filing jointly, married filing separately, and head of household. Depending on the type of filing status, the federal and state income taxes owed may differ.

  • Residence State

    The state of residence of the account holder for tax purposes. This input is used to calculate the state income tax on gross income as well as 401k withdrawal.

  • (Checkbox) Separated from Service

    Tick off this checkbox if the account holder has retired from work. This means that the person has stopped working for an employer. This variable is used to assess the eligibility for early withdrawal penalty exemption.

  • Age at Time of Separation

    This input is only visible when the Separated from Service checkbox is ticked off. Input full years of age at which the account holder has retired from work. This variable is used to assess the eligibility for early withdrawal penalty exemption. The IRS allows people who separated from service at 55 years of age or older to be exempt from early withdrawal penalty. It is important to note that qualified public safety employees can be exempt from early withdrawal if they retire at 50 years of age or older.

  • (Checkbox) Deceased

    Tick off this checkbox if the account holder is deceased. Usually, 401k holdings can be passed as inheritance and avoid fees and taxes. In case of death of the account holder, the heirs should get professional help from a lawyer or an accountant on 401k matters.

  • (Checkbox) Disabled

    Tick off this checkbox if the account holder has a total and permanent disability. This variable is used to assess the eligibility for early withdrawal penalty exemption.

Financial Information

The inputs in the financial information section relate to the withdrawal itself. The following inputs can be found in the financial information section.

  • Amount to Withdraw

    The amount you want to withdraw from the account at once. This metric is used to calculate the fees and taxes paid on the withdrawal as well as the net amount received.

  • Rate of Return

    The average rate of return you expect to receive from the 401k portfolio. The US market index S&P 500 historical returns 7% annually on average. This value is used to calculate the forgone return on investment from the withdrawal.

Exemptions and Deductions for 401k Withdrawal

The IRS provides a guide on early withdrawal exemptions and deductions. This guide outlines who can be eligible for the exemptions as well as it outlines what deductions are allowed for the 401k account. It is important to note that the amount of allowed deductions must be specified by the IRS on a case-by-case basis. The following table provides a description of exemptions and deductions that apply to 401k withdrawals.

Exemptions (People Who Apply Do Not Need to Pay 10% Early Withdrawal Fee)

Exemption CriteriaEligibility Requirement
AgeAccount Holder Must Be of Age 59.5 or Older.
DeathAccount Holder Must Be Deceased.
DisabilityAccount Holder Must Have a Total and Permanent Disability.
Seperation from ServiceAccount Holder Must Retire at Age of 55 or Older. Eligible Public Safety Employees of State Must Retire at Age 50 or Older.

Deductions (Items That May Be Exempt from 10% Early Withdrawal Fee)

Deduction CriteriaDescription
Automatic EnrollmentAutomatic Withdrawals From the Plan If Permitted by the IRS.
Corrective DistributionsCorrective Distributions of Excess Contributions and Excess Deferrals.
Domestic RelationsPermissible Withdrawals to an Alternate Payee Under a Qualified Domestic Relations Order.
Equal PaymentsPermissible Withdrawals of Series of Substantially Equal Payments.
ESOPDividends That Pass Through From an ESOP.
LevyIRS Levy of the 401k Plan.
MedicalEligible Amount of Unreimbursed Medical Expenses of less than 10% of Adjusted Gross Income for 2021.