What is the penalty for early withdrawal from your 401K?

Individuals who withdraw money from a 401(k) account prior to age 59 1/2 must pay a 10 percent penalty in most cases. In addition to the penalty, individuals must pay federal income tax on the amount withdrawn.

There are some exceptions to the 10 percent penalty. Individuals who incur deductible medical expenses that are higher than 10 percent of their adjusted gross income are not subject to the penalty. Qualified military reservists who serve on active duty for at least six months may make a withdrawal without penalty. Withdrawals also are not penalized if the individual suffers from a total and permanent disability.