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January 29, 2023
Question

If you withdraw from your 401k earlier to pay school tuition, does that count as a tax deduction at all? Or am I still penalized the full amount for 401k?

  • January 29, 2023
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1 reply

Employee
January 29, 2023

While IRAs offer an exception to the early withdrawal penalty for college expenses, early 401k withdrawals are always subject to a 10% penalty—no exceptions. Traditional 401k withdrawals are reported as income in the year that you make the withdrawal, increasing your Adjusted Gross Income (AGI).