Cash Out Calculator
When you leave a job or encounter unexpected expenses, it may seem tempting to cash out your retirement plan money. However, when you take an early withdrawal from a 401(k), you could lose a significant portion of your retirement money right from the start. Income taxes, a 10% federal penalty tax for early distribution, and state taxes could leave you with barely over half of your original amount, depending on your situation.
Need an alternative to cashing out your 401(k)?
How to Use the 401(k) Cash Out Calculator
This withdrawal calculator can help you decide whether to cash out your 401(k). The estimates are based solely on the information you provide and offers a starting point for your decision-making. Everyone’s personal circumstances are different and there are numerous factors to consider before cashing out a 401(k).
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Definitions
Current age
Your current age.
Age at retirement
Age you wish to retire. The tool calculates the ending balance at retirement for each of your rollover options.
Federal income tax rate
Consult the table below to determine your federal tax bracket. If you are unsure, the calculator will choose 25%. Please note that state taxes are entered in a separate entry field. Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your Federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Surviving Spouse | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $23,200 | $0 - $11,600 | $0 - $16,550 | $0 - $11,600 |
| 12% | $23,200 - $94,300 | $11,600 - $47,150 | $16,550 - $63,100 | $11,600 - $47,150 |
| 22% | $94,300 - $201,050 | $47,150 - $100,525 | $63,100 - $100,500 | $47,150 - $100,525 |
| 24% | $201,050 - $383,900 | $100,525 - $191,950 | $100,500 - $191,950 | $100,525 - $191,950 |
| 32% | $383,900 - $487,450 | $191,950 - $243,725 | $191,950 - $243,700 | $191,950 - $243,725 |
| 35% | $487,450 - $731,200 | $243,725 - $609,350 | $243,700 - $609,350 | $243,725 - $365,600 |
| 37% | Over $731,200 | Over $609,350 | Over $609,350 | Over $365,600 |
| *Caution: Do not use these tax rate schedules to figure 2023 taxes. Use only to figure 2024 estimates. Source: Rev. Proc. 2023-34 | ||||
State income tax rate
The current state marginal tax rate you expect to pay on any additional income (or taxable distributions).
Current 401(k) balance
The starting balance or current amount you have invested or saved in your 401(k).
Annual rate of return
The annual rate of return for your 401(k) account. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2023, had an annual compounded rate of return of 15.2%, including reinvestment of dividends. From January 1, 1970 to December 31st 2023, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.9% (source: www.spglobal.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Alternatives to Cashing Out a 401(k)
While cashing out a retirement plan has its disadvantages, leaving money in an old 401(k) retirement plan can make it harder to understand the big picture. Consider rolling your 401(k) into an IRA or a new employer’s retirement plan to stay on track toward your goals, and spare yourself from penalties and taxes on early 401(k) withdrawals.
If you are in need of immediate funds, borrowing from your 401(k) or changing current 401(k) allocations are alternatives worth considering. They may be able to bridge the gap.
Marginal Tax Rate
The highest percentage of tax applied to the last dollar of income, based on the income tax rates set annually by the federal government that are organized into tax brackets. Here is a hypothetical example using 2017 income tax rates in the above table to determine the marginal tax rate for someone with taxable income of $80,000** who is married, filing jointly:
The marginal tax rate is 25% because the taxable income falls within the $75,900 - $153,100 range.
**Does not include state taxes, local taxes, tax credits, exemptions or deductions. Also does not include qualified dividends or long-term capital gains, which are taxed from 0% - 20%, depending on your tax bracket.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide a personal recommendation, fiduciary or investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes; other options may be available for your investment. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
©2025 Standard & Poor's Financial Services LLC. All rights reserved. For intended recipient only. No further distribution and/or reproduction permitted. Standard & Poor's Financial Services LLC ("S&P") does not guarantee the accuracy, adequacy, completeness or availability of any data or information contained herein and is not responsible for any errors or omissions or for the results obtained from the use of such data or information. S&P GIVES NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE IN CONNECTION TO THE DATA OR INFORMATION INCLUDED HEREIN. In no event shall S&P be liable for any direct, indirect, special or consequential damages in connection with recipient's use of such data or information.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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