Withdrawals Before Retirement

Publications and Resources

401(k) Fee Disclosure Form. ACLI, working with the American Bankers Association and the Investment Company Institute, developed a 401(k) Fee Disclosure Form designed to assist companies in making informed cost-benefit decisions when selecting 401(k) service providers.

Since the money in a defined contribution money is intended for retirement, there are penalties for early withdrawal. If you withdraw money before age 59 ½, you will face a 10 percent federal income tax penalty.

Under certain limited conditions, you can withdraw money before 59 ½ without penalty. These include disability, death, or catastrophic medical expenses. Also, you are not subject to a federal tax penalty if leave your job and choose to receive your funds in payouts that last your lifetime, or the lifetime of you and your spouse.

Many defined contribution plans allow you to borrow funds with certain restrictions. Normally you must pay back the money borrowed plus interest within five years.