When and how you can take money out
Withdrawal rules for 401(k) and Roth IRA accounts in 2026, sourced from IRS Publication 575 (Pension and Annuity Income), IRS Publication 590-B (IRA Distributions), and 26 U.S.C. § 72(t): the 10% early-withdrawal penalty, twelve statutory exceptions, Rule of 55 (§ 72(t)(2)(A)(v)), RMDs at 73 (SECURE 2.0 § 107), and SECURE 2.0 § 115 emergency provisions.
Withdrawal rules side by side
| Rule | 401k | Roth IRA |
|---|---|---|
| Penalty free age | 59.5 (or 55 if separated) | 59.5 for earnings; contributions any time |
| Tax on withdrawal | Ordinary income on full amount | Tax free if qualified; contributions always tax free |
| Five year rule | Not applicable | Required for tax free earnings withdrawals |
| 10 percent early penalty | Yes, before 59.5 (with exceptions) | On earnings only, before 59.5 |
| Required minimum distributions | Begin at 73 | None for owner; 10 year rule for inherited |
| Loan provisions | Up to 50 percent of balance, $50,000 cap | Not allowed; contributions are accessible |
| Hardship withdrawals | Permitted under plan rules | Not relevant; contributions accessible |
| SECURE 2.0 emergency withdrawal | Up to $1,000 per year, repayable | Up to $1,000 per year, repayable |
Roth IRA ordering rules: why contributions are always accessible
Per IRS Publication 590-B 'Ordering Rules for Distributions', Roth IRA withdrawals come out in a fixed order: contributions first (always tax-free and penalty-free, no five-year clock), conversions next oldest-first (each conversion has its own five-year clock for the 10% penalty under 26 U.S.C. § 408A(d)(3)(F)), then earnings (qualified only at 59-1/2 + five-year aggregation rule under § 408A(d)(2)).
Contributions
Withdrawn first, tax free and penalty free at any age. The full contribution history adds up across all your Roth IRA accounts.
Conversions
Withdrawn second, oldest conversions first. Each conversion has its own 5 year clock for the 10 percent penalty (not for tax).
Earnings
Withdrawn last. Tax free and penalty free only after 5 years and age 59.5 (or another qualifying event). Otherwise both apply.
Twelve statutory paths to penalty-free early access
Each exception is codified in 26 U.S.C. § 72(t)(2). Report on IRS Form 5329 with the appropriate exception code.
Required minimum distributions: SECURE 2.0 § 107 ages
Per SECURE 2.0 § 107, RMDs from 401(k)s and Traditional IRAs begin at the statutory age determined by year of birth. See IRS Publication 590-B for the distribution tables (Single Life, Joint Life, Uniform Lifetime).
Most non-spouse beneficiaries must drain inherited 401(k) and IRA balances within 10 years of the original owner's death under the SECURE Act of 2019 § 401(a)(2). Annual RMDs may be required during the 10-year window if the original owner had already begun RMDs (final regulations published 2024). Spousal beneficiaries have additional options including spousal rollover and the 10-year deferred-RMD election per IRS Publication 590-B.
SECURE 2.0 § 302 reduced the excise tax on RMD shortfalls from 50% to 25%, further reduced to 10% if corrected within the SECURE 2.0 correction window (generally by the close of the second tax year following the year of the missed RMD). Report on IRS Form 5329.
Rollovers: direct beats indirect, every time
Per IRS Publication 575 'Rollovers' and IRS Publication 590-A 'Rollovers from Employer Plans'. Direct trustee-to-trustee transfers avoid the mandatory 20% withholding.
Trustee-to-trustee under § 401(a)(31)
Zero withholding. Money moves directly from your old 401(k) custodian to the new custodian (IRA or new 401(k)). No 60-day deadline. Default option for most plans.
Mandatory 20% withholding under § 3405(c)
Distribution paid to you with 20% federal income tax withheld. You must redeposit the gross amount (including the withheld 20%) to a qualifying plan within 60 days per 26 U.S.C. § 402(c)(3). Falling short by even one day taxes the gap. Avoid this route.
Per 26 U.S.C. § 408(d)(3)(B)
IRA-to-IRA indirect rollovers are limited to one in any 12-month period across all IRAs you own, per Bobrow v. Commissioner T.C. Memo 2014-21 and IRS Publication 590-A. Does NOT apply to direct trustee-to-trustee transfers or to Roth conversions.
SECURE 2.0 § 304 raised threshold to $7,000
Per 26 U.S.C. § 401(a)(31)(B) and § 411(a)(11), plans may force cash-out of separated- participant balances at or below $7,000 (up from $5,000 pre-SECURE-2.0). If your balance was force-distributed without your consent, the rollover clock still runs.
Withdrawal questions
Can I withdraw from my Roth IRA before retirement?+
Per the Roth IRA ordering rules in IRS Publication 590-B, contributions can be withdrawn at any age, any time, with no tax and no penalty. Earnings are tax-free only if you are at least 59-1/2 and the account has been open at least five years (qualified distribution under 26 U.S.C. § 408A(d)(2)). Withdraw earnings before that and you owe ordinary income tax plus the 10% additional tax under 26 U.S.C. § 72(t) unless an exception applies.
What is the Rule of 55?+
Per 26 U.S.C. § 72(t)(2)(A)(v) and IRS Publication 575 'Tax on Early Distributions', if you separate from service in or after the year you turn 55 you can take penalty-free 401(k) withdrawals from that employer's plan only. The withdrawals are still taxable as ordinary income under § 72. The Rule of 55 applies only to the 401(k) of the employer you most recently left, not to old plans or IRAs. Qualified public-safety officers can use age 50 per SECURE 2.0 § 308 (26 U.S.C. § 72(t)(10)).
When do required minimum distributions start?+
Per SECURE 2.0 § 107 (codified at 26 U.S.C. § 401(a)(9)(C)), RMDs from a 401(k) begin at age 73 for participants born 1951-1959 and 75 for those born 1960 or later. The Roth IRA has no RMDs during the original owner's lifetime under 26 U.S.C. § 408A(c)(5). The Roth 401(k) had lifetime RMDs until SECURE 2.0 § 325 repealed them effective tax year 2024 (26 U.S.C. § 402A(d)). See IRS Publication 590-B for the distribution tables.
Is there a way to take penalty free 401k withdrawals before 59.5?+
Yes, several exceptions in 26 U.S.C. § 72(t)(2) and IRS Publication 575: Rule of 55 (§ 72(t)(2)(A)(v)), Substantially Equal Periodic Payments per IRS Notice 2022-6 (§ 72(t)(2)(A)(iv)), disability (§ 72(t)(2)(A)(iii)), qualified reservist distributions (§ 72(t)(2)(G)), medical expenses above 7.5% of AGI (§ 72(t)(2)(B)), IRS levies (§ 72(t)(2)(A)(vii)), qualified domestic relations orders (§ 72(t)(2)(C)), SECURE 2.0 § 115 emergency withdrawals up to $1,000 per year (§ 72(t)(2)(I)), and SECURE 2.0 § 314 domestic-abuse withdrawals up to $10,000 (§ 72(t)(2)(K)). Each has specific rules in IRS Pub 575 and tax remains due. Report on IRS Form 5329.
Can I take a loan from my 401k instead of withdrawing?+
Yes if your plan permits loans (most do). Per 26 U.S.C. § 72(p) and Treasury Regulation § 1.72(p)-1: the maximum is the lesser of $50,000 (reduced by your highest outstanding balance over the prior 12 months) or 50% of your vested balance, with a $10,000 floor. Repayment is generally five years (longer for principal residence) per IRS Publication 575 'Loans Treated as Distributions'. Failure to repay triggers a deemed distribution taxed under § 72.
What is the RMD penalty if I miss a required distribution?+
Per SECURE 2.0 § 302, the excise tax on RMD shortfalls under 26 U.S.C. § 4974 is reduced from 50% to 25%, further reduced to 10% if corrected within the SECURE 2.0 correction window (generally by the close of the second tax year following the year of the missed RMD). Report on IRS Form 5329.