Early 401(k) Withdrawals: Benefits, Risks and Alternatives

If you need money now and are thinking about tapping your 401(k) savings, you might want to consider other available options.

A hammer hovers above an intact piggy bank.
(Image credit: Getty Images)

As a Kiplinger reader, you’re likely someone who manages their finances thoughtfully and has been saving for retirement in a tax-advantaged plan like a 401(k). You’ve also probably heard that taking cash out of your 401(k) before you’re 59½ is generally inadvisable, given the taxes and penalties on early withdrawals.

But even the most responsible of us can face a financial emergency and have thought about tapping into savings stashed in a 401(k). Maybe you have unexpected medical bills after an accident or hurricane damage to your home. Or maybe you need funds to pursue an exciting new opportunity, like buying a home, starting a business or going back to school.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Stephen B. Dunbar III, JD, CLU
Director of Diversity & Inclusion, Executive VP, Equitable Advisors

Stephen Dunbar, Executive VP of Equitable, has built a thriving financial services practice where he empowers others to make informed decisions and take charge of their future. He and his team advise on over $3B in AUM and $1.5B in protection coverage. As a National Director of DEI for Equitable, Stephen acts as a change agent for the organization, creating a culture of diversity and inclusion. He earned a bachelor's in Finance from Rutgers and a J.D. from Stanford.