How Much Do You Get From a 401(k) After Taxes?

If you cash out a traditional 401(k) before age 59½, expect to keep roughly 60% to 70% of the gross amount after federal income tax, the 10% early withdrawal penalty, and state tax. Someone in the 22% federal bracket withdrawing $20,000 typically takes home around $13,000 to $14,000. How much you get from a 401(k) after taxes depends on four things: your federal bracket, your state’s income tax, whether you’re under 59½, and how much of the balance is actually vested in your name.

Federal Income Tax Comes Off First

Every dollar from a traditional 401(k) is ordinary income in the year you receive it. The withdrawal stacks on top of your wages, so part of it can be pushed into a higher bracket than your salary alone occupies. For 2026, single filers pay 10% on income up to $12,400, 12% up to $50,400, 22% up to $105,700, 24% up to $201,775, and rates continue up to 37% above $640,600. Married couples filing jointly hit those rates at roughly double the income thresholds.¹

The amount withheld at the time of the payout is not the same as the tax you actually owe. Federal law requires plan administrators to withhold 20% upfront on eligible rollover distributions paid directly to you.² If your true tax rate on the money ends up higher than 20%, you owe the difference at filing. If it’s lower, you get a refund. Either way, the 20% is a prepayment, not the final bill.

A worked example makes this concrete. A single person earning $60,000 in salary who withdraws $20,000 from a traditional 401(k) has $80,000 in gross income. After the $16,100 standard deduction for 2026, taxable income is $63,900. Roughly $13,500 of the withdrawal moves from the 12% bracket into the 22% bracket. Federal income tax attributable to the $20,000 comes out to about $3,750, meaning the 20% withholding slightly overshot what’s actually owed on that piece.¹

The 10% Early Withdrawal Penalty

If you’re younger than 59½, the IRS adds a 10% penalty on top of the income tax. It applies to the full taxable amount of the distribution, not just what lands in your account after withholding.³ On a $20,000 withdrawal, that’s another $2,000. Combined with the $3,750 in federal income tax from the example above, federal obligations alone eat about $5,750, or roughly 29% of the gross, before any state tax.

State Taxes Add Another Layer

Most states treat 401(k) distributions as ordinary income. State withholding on retirement distributions generally runs between 4% and 8%, though your actual state tax may differ from what’s withheld. Texas, Florida, Nevada, and Wyoming impose no state income tax, so residents keep more of the withdrawal. States with top rates above 10% can push the combined tax-and-penalty hit past 45%.

Applying a 5% state rate to the running example adds $1,000 in state tax. Total federal and state deductions come to about $6,750, leaving a net check of roughly $13,250 on a $20,000 gross withdrawal. That’s 66% take-home, a realistic outcome for someone in the 22% federal bracket cashing out early in a moderate-tax state.

Check Your Vested Balance First

Your account balance and your available balance are not always the same number. Salary deferrals you contributed yourself are always 100% vested.⁴ Employer contributions vest on a schedule set by the plan, and federal law allows two common structures:

Cliff vesting, where you own 0% of employer contributions until you hit a service milestone (often three years) and then jump straight to 100%.
Graded vesting, where ownership rises in steps and typically reaches 100% after six years, commonly at 20% per year starting in year two.

If your account shows $50,000 but you’ve only worked three years under a six-year graded schedule, about $10,000 of the employer match isn’t yours yet. You’d walk with roughly $40,000 in vested funds, and taxes and the penalty apply only to what you actually receive.⁴

Exceptions That Remove the 10% Penalty

The 10% penalty has more escape hatches than most people realize. If you qualify for one, you still owe income tax on the distribution, but the extra 10% goes away:

Separation from service at 55 or older. Leaving your employer during or after the year you turn 55 lets you take penalty-free withdrawals from that employer’s plan. Public safety employees in governmental plans qualify at 50.⁵
Total and permanent disability, as the IRS defines it.
Death. Beneficiaries who inherit a 401(k) don’t pay the early withdrawal penalty regardless of age.
Unreimbursed medical expenses exceeding 7.5% of your adjusted gross income.
A qualified domestic relations order paying a former spouse under a divorce decree.
Substantially equal periodic payments (SEPP), a schedule based on your life expectancy that must run for five years or until you reach 59½, whichever is later.⁶
A federally declared disaster, up to $22,000 if you suffered qualifying economic loss.
Terminal illness certified by a physician.⁵

The Rule of 55 has a limit people miss: it only applies to the plan at the employer you’re leaving, not to accounts from earlier jobs or to IRAs. SEPP is powerful but rigid; modifying the schedule early triggers retroactive penalties on every distribution you already received.

Roth 401(k) Withdrawals Come Out Whole

If your contributions went into a designated Roth 401(k), the math changes. You already paid income tax on that money before it went in, so a qualified distribution comes out completely tax-free and penalty-free. You keep 100%.⁷

Two conditions must be met: the Roth account has to be at least five tax years old, and you must be at least 59½ (or disabled, or the distribution is going to a beneficiary after your death). Withdraw earlier and the earnings portion can be taxed and penalized, though your original contributions still come out tax-free because tax was paid on them going in.

After 59½ the Penalty Ends

Withdrawals taken at or after 59½ still count as ordinary income and are still taxed at your federal and state rates, but the 10% penalty no longer applies. Take-home on a traditional 401(k) distribution at that age typically runs 70% to 85% of the gross, depending on your bracket and state. Starting at 73, required minimum distributions kick in on traditional 401(k) balances; those are taxed as ordinary income and carry no early withdrawal penalty since you’re well past the age threshold.⁸

Ways to Keep More of the Money

If you don’t actually need to spend the money, a direct rollover avoids every tax and penalty in this article. The plan sends your balance straight to an IRA or another employer’s plan, and because the money never touches your hands, the IRS treats it as a transfer rather than a distribution.⁹

An indirect rollover is riskier. You get a check with 20% already withheld and have 60 days to deposit the full original amount into a qualifying account. To avoid tax on the withheld portion, you have to replace it out of pocket and wait for a refund. Miss the 60 days or fail to make up the shortfall and the missing piece becomes a taxable distribution.⁹

If your plan permits loans, borrowing from your 401(k) avoids taxes entirely because a plan loan isn’t a distribution. You can borrow up to 50% of your vested balance or $50,000, whichever is less, and repay with at least quarterly payments over five years (longer for a primary residence purchase). The trap is leaving your job or defaulting on payments; the outstanding balance is then reclassified as a distribution, and income tax plus the 10% penalty apply if you’re under 59½.¹⁰

One boundary worth flagging: a hardship withdrawal is not a tax break. Some plans allow distributions for immediate financial needs like medical bills, tuition, funeral costs, buying a primary home, or preventing eviction or foreclosure.¹¹ The “hardship” label only means the plan will release the money. You still owe regular income tax, and if you’re under 59½, the 10% penalty usually applies too.¹² Assuming otherwise costs people real money.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
2
Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans
3
Internal Revenue Service. 401k Resource Guide Plan Participants General Distribution Rules
4
Internal Revenue Service. Retirement Topics – Vesting
5
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
6
Internal Revenue Service. Substantially Equal Periodic Payments
7
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
8
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
9
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
10
Internal Revenue Service. Retirement Topics – Loans
11
Internal Revenue Service. Retirement Topics – Hardship Distributions
12
Internal Revenue Service. 401(k) Plan Hardship Distributions – Consider the Consequences