Thinking of Taking a 401(k) Withdrawal? Here's What It Could Cost You

Withdrawing money from a 401(k) before age 59 1/2 is usually an extremely expensive proposition since you're hit with a 10% tax penalty on your early distribution. The CARES Act aimed to change that by allowing you to take a penalty-free withdrawal of up to $100,000, or 100% of your vested account balance -- whichever is less. While this special rule applies only to COVID-19 related distributions in 2020, it takes some of the sting out if you have to tap your retirement accounts early.