Do penalties for early withdrawals from a 401(k) depend on how old you are?

Penalties for individuals who withdraw money from a 401(k) are based on age, because those who withdraw from their account prior to age 59 1/2 must pay a 10 percent penalty, according to the IRS. Individuals must also pay federal income tax on the amount they withdraw.

Generally, any withdrawals from 401(k) accounts made before the account holder is 59 1/2 are determined to be early distributions, states the IRS. However, if an account holder retires at the age of 55 or older, he can withdraw funds penalty free from the 401(k) plan the company in which he's retiring from, advises About.com.