When Do You Pay the 10% Early Withdrawal Penalty?

You pay the 10% early withdrawal penalty when you file your federal income tax return for the year you took the money out, and it is due by April 15 of the following year, the same date as the rest of your income tax. A withdrawal taken any time during 2025 has a payment deadline of April 15, 2026.¹ The penalty applies on top of ordinary income tax when you pull funds from a 401(k), 403(b), traditional IRA, SEP IRA, or SIMPLE IRA before age 59½,² but more than 20 exceptions can eliminate it, so not every early withdrawal actually costs you the extra 10%.

The April 15 Deadline and What Late Payment Costs

The 10% additional tax rides along with your regular income tax return. If April 15 lands on a weekend or federal holiday, the deadline moves to the next business day. Anything unpaid after that date starts accruing a failure-to-pay penalty of 0.5% per month on the outstanding balance, capped at 25%.³

Filing an extension does not push the payment date. An extension gives you until October 15 to send in the paperwork, but the money is still due in April, and unpaid amounts begin accruing interest right away.⁴ As of early 2026, the IRS is charging 7% annual interest on underpayments, compounded daily.⁵

When You Owe Estimated Payments Before April

Waiting until April is not always allowed. If the combined income tax and 10% penalty on your withdrawal will leave you owing $1,000 or more after subtracting withholding and credits, the IRS expects quarterly estimated payments during the year rather than a single lump sum at filing.⁶ Use Form 1040-ES to calculate the installments:

First quarter (January–March): due April 15
Second quarter (April–May): due June 15
Third quarter (June–August): due September 15
Fourth quarter (September–December): due January 15 of the following year

You can sidestep the underpayment penalty by meeting a safe harbor. Withholding and estimated payments together need to cover the smaller of 90% of your current-year tax or 100% of the tax shown on last year’s return. If your prior-year adjusted gross income was above $150,000 (or $75,000 if married filing separately), that 100% figure rises to 110%.⁷ Hitting one of those thresholds protects you even if the final bill turns out larger than expected, which is useful when a mid-year withdrawal has thrown off your numbers.

How the Penalty Shows Up on Your Return

Your plan administrator or IRA custodian sends you Form 1099-R after any year in which you took a distribution. Box 1 shows the gross amount, Box 2a the taxable portion, Box 4 any federal tax already withheld, and Box 7 a distribution code.⁸ Code 1 means “early distribution, no known exception.” That code does not mean you owe the penalty. It only means the plan reported the withdrawal without knowing whether you qualify to skip it. Claiming an exception is your job at filing time.

If Code 1 is on every 1099-R and no exception applies, you can skip Form 5329. Multiply the taxable amount by 10% and put the result on Schedule 2 (Form 1040), Line 8.⁹

If an exception does apply, you file Form 5329. Enter the taxable early distribution on Line 1, the exempt portion on Line 2, and write the correct exception number next to it. A few of the common codes: 01 for separation from service at age 55 or older, 05 for medical expenses above 7.5% of AGI, 09 for a first-time home purchase, and 12 when the 1099-R wrongly flagged a distribution as early. The gap between Line 1 and Line 2 is the amount subject to the 10% tax, which then carries over to Schedule 2.⁹

Situations Where You Don’t Owe the Penalty

The IRS lists more than 20 exceptions to the 10% additional tax. Some apply to any retirement account, some only to IRAs, and some only to employer plans like 401(k)s.¹⁰ The exceptions most people use:

Total and permanent disability
Death (distributions taken by a beneficiary)
Unreimbursed medical expenses exceeding 7.5% of adjusted gross income
A qualified birth or adoption, up to $5,000 per child within a year of the event
Terminal illness certified by a physician, with no dollar cap
An IRS levy on the account
Substantially equal periodic payments taken over a schedule that runs at least five years or until age 59½, whichever is later
Separation from service in or after the year you turn 55, for withdrawals from that employer’s plan (age 50 for qualified public safety employees and certain federal employees)
Payments to a former spouse under a qualified domestic relations order
Higher education expenses paid from an IRA, for you, your spouse, children, or grandchildren
Up to $10,000 in lifetime IRA withdrawals for a first-time home purchase
Health insurance premiums paid from an IRA after 12 consecutive weeks of unemployment compensation
Emergency personal expenses, up to $1,000 per year (SECURE 2.0, effective 2024), with a three-year wait before another emergency distribution unless you repay it or make new contributions covering it⁹
Domestic abuse by a spouse or domestic partner, up to the lesser of $10,000 or 50% of the account balance

Roth IRAs sit outside most of this because you funded them with after-tax dollars. Your original contributions come out at any time and any age with no penalty and no income tax. The 10% only reaches Roth earnings, and only if you take them before age 59½ and before the account is five years old.

The 60-Day Rollover That Erases the Penalty

If you deposit the distribution into another qualified retirement account within 60 days, the withdrawal becomes a rollover, not a taxable distribution, and no penalty applies.¹¹ Blow the 60 days and the whole amount becomes taxable, with the 10% on top if you are under 59½. A direct trustee-to-trustee transfer avoids the deadline pressure entirely and is the cleanest way to move funds without penalty risk.

How to Send the Payment

IRS Direct Pay moves funds from a checking or savings account at no charge. Choose “Balance Due” as the reason and select the tax year that matches your withdrawal.¹²

The Electronic Federal Tax Payment System (EFTPS) is another free option and lets you schedule payments up to 365 days ahead. You have to enroll first and wait for a PIN in the mail, which can take up to five business days.¹³

To pay by mail, send a check or money order made out to “U.S. Treasury” along with Form 1040-V so the IRS credits your account and the right tax year. The envelope has to be postmarked by the filing deadline.¹⁴

1
Internal Revenue Service. When to File
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Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
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Internal Revenue Service. Failure to Pay Penalty
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Internal Revenue Service. Get an Extension to File Your Tax Return
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Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
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Internal Revenue Service. Estimated Taxes
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Internal Revenue Service. Form 1040-ES Estimated Tax for Individuals
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Internal Revenue Service. Instructions for Forms 1099-R and 5498
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Internal Revenue Service. Instructions for Form 5329 – Additional Taxes on Qualified Plans
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Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
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Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
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Internal Revenue Service. Direct Pay With Bank Account
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Internal Revenue Service. EFTPS – The Electronic Federal Tax Payment System
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Internal Revenue Service. Pay by Check or Money Order