What does an early 401(k) or IRA withdrawal to fund trading actually cost?

Typically a 10% penalty if you are under 59 and a half, plus ordinary income tax on the amount withdrawn, plus the future value that money could have grown to if it had stayed invested. This calculator totals all three based on your own inputs.

Does this calculator account for Roth accounts or 72(t) payment plans?

No. It assumes a traditional, pre-tax account and applies the standard 10% penalty rule and ordinary income tax. Roth accounts and Rule 72(t) substantially equal periodic payments follow different rules that are not modeled here.

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What does withdrawing money early from a 401(k) or IRA to fund a trading account actually cost me?

The traders who last aren't the ones who never lose. They're the ones who never guess.

Jason Parker, Founder of Trading Habits

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The future value figure models simple compounding of the withdrawn amount at your assumed return rate.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.

What does withdrawing money early from a 401(k) or IRA to fund a trading account actually cost me?

Enter Your Withdrawal

Your Result

How this is calculated

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