Is there a way to withdraw from a 401(k) before 59½ without penalty?

Yes. Several exceptions to the 10% early withdrawal penalty exist, including separation from service at or after age 55, disability, certain medical expenses, substantially equal periodic payments, qualified birth or adoption, and a handful of other categories added by the SECURE 2.0 Act.

Does the early withdrawal penalty apply to Roth 401(k) contributions?

It can apply to the earnings portion of a non-qualified early distribution. Your own contributions to a Roth 401(k) were already taxed, but if you take a non-qualified distribution, part of it is treated as coming from earnings, and that earnings portion can be subject to both income tax and the 10% penalty unless an exception applies.

401(k) Early Withdrawal Penalty — Rules & Exceptions

The basic rule

A distribution from a traditional 401(k) is included in your taxable income no matter your age. But if you take that distribution before age 59½ and no exception applies, the taxable portion is also hit with an additional 10% federal penalty under Internal Revenue Code Section 72(t). The penalty is on top of your regular income tax — it isn't a substitute for it.

Plans are also generally required to withhold 20% for federal income tax on most eligible lump-sum distributions from a 401(k), whether or not the penalty applies — that withholding is a prepayment toward your tax bill, not the penalty itself, and your actual tax owed is settled when you file your return.

Exceptions to the 10% penalty

The penalty does not apply if the distribution falls into one of these categories (this list applies specifically to 401(k) and other employer plans — IRAs have an overlapping but not identical list of exceptions):

Separation from service in or after the year you turn 55 (age 50 for qualified public safety employees) — often called the "rule of 55."
Total and permanent disability.
Death — distributions to a beneficiary after the account owner's death.
Substantially equal periodic payments under Section 72(t) — a structured payment schedule you commit to for at least 5 years or until age 59½, whichever is longer.
A qualified domestic relations order (QDRO) — payments to an alternate payee (such as a former spouse) under a divorce order.
Unreimbursed medical expenses exceeding 7.5% of your adjusted gross income for the year.
An IRS levy on the plan itself.
Qualified birth or adoption distributions — up to $5,000 per birth or adoption.
Terminal illness distributions — added by SECURE 2.0, for individuals certified by a physician as terminally ill.
Domestic abuse victim distributions — added by SECURE 2.0, generally up to the lesser of $10,000 (indexed) or 50% of the account.
Emergency personal expense distributions — added by SECURE 2.0, limited to one $1,000 distribution per year, repayable within three years.
Federally declared disaster distributions — up to $22,000, under rules established by SECURE 2.0.
Certain federally declared disaster or qualified reservist distributions for military reservists called to active duty.

Whether your plan actually offers a given type of in-service distribution (separate from whether the penalty applies to it) depends on your plan document — not every employer plan allows every type of withdrawal listed above.

The “rule of 55” in more detail

Key takeaway

If you leave your job (voluntarily or not) in or after the calendar year you turn 55, you can generally take penalty-free distributions from that employer's 401(k) — but only that employer's plan, and only if you leave the funds there rather than rolling them into an IRA.

Rolling the balance into an IRA after leaving generally forfeits the rule-of-55 exception on that money, since an IRA doesn't offer it — IRAs use age 59½ with a different, narrower set of exceptions. If you're planning an early retirement around this rule, that rollover decision matters.

Withholding vs. the penalty vs. your actual tax bill

These are three separate numbers that people frequently conflate:

20% mandatory withholding — what the plan sends to the IRS on your behalf from most lump-sum distributions, as a prepayment.
10% early withdrawal penalty — an additional tax reported and paid when you file your return, unless an exception applies.
Your marginal income tax rate — the taxable portion of the distribution is added to your other income for the year and taxed at your regular federal (and possibly state) rates, which may be higher or lower than the 20% withheld.

It's common to owe more than what was withheld, or occasionally to get some of the withholding back as a refund, depending on your total income for the year.