What does withdrawing money early from a 401(k) or IRA to fund a trading account actually cost me?
Enter Your Withdrawal
This assumes a traditional, pre-tax retirement account. Roth accounts and specific exceptions like Rule 72(t) are not modeled here.
Your Result
Fill in the fields on the left and click Calculate to see the true cost of this withdrawal.
How this is calculated
The 10% early withdrawal penalty typically applies to distributions taken before age 59 and a half from most traditional 401(k) and IRA accounts, with a small number of narrow exceptions this tool does not model, such as Rule 72(t) substantially equal periodic payments.
The tax estimate treats the entire withdrawal as ordinary income taxed at your entered marginal rate. Actual bracket effects, state rules, and account type can change this figure.
The future value figure models simple compounding of the withdrawn amount at your assumed return rate. It is not a guarantee of what markets will actually do, and returns are never a straight line year to year.
Roth account withdrawals of your own contributions can be treated differently than this tool assumes. Confirm your specific account type and its rules before withdrawing.
Risk & liability disclaimer: This calculator performs a simplified estimate based on the numbers and assumptions you enter. It is not tax, legal, or financial advice. Actual retirement account penalty and tax rules are complex, vary by account type, state, and personal situation, and can change. Consult a qualified tax professional before making a withdrawal decision. Trading involves risk of loss, and this tool does not recommend withdrawing retirement funds to fund a trading account. Trading Habits is not a broker-dealer, registered investment adviser, or tax professional.
Where the Money Comes From Matters as Much as How Much
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Compare this against other funding sources before deciding how to capitalize a trading account.