401(k) plans allow you to begin withdrawing money, without penalty, after age 59½. However, there is a 10% penalty tax on withdrawals made before age 59½ (if you don't roll it over) from your 401(k) plan, unless the distribution is made under one of the limited circumstances allowed by law. That is, there is a penalty for taking your money "too soon."
Some Exceptions to the 10% Early Withdrawal Penalty for 401(k) Plans
The 10% early withdrawal penalty does not apply to these situations:
Distributions made after age 59½
Distributions made after you separate from service during or after the year in which you reach age 55
Distributions that you roll over to another qualified retirement plan, tax-sheltered annuity, or IRA within 60 days.
Distributions made due to disability or after your death
Distributions for qualified medical expenses that exceed 10% of adjusted gross income in 2019 (7.5% in 2018).
Distributions after separation from service that are part of a scheduled series of substantially equal periodic payments
IMPORTANT NOTE: Using your retirement plan savings for non-retirement purposes should always be your last resort. For more information, see the section Distributions Over Your Life Expectancy.
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