Penalties for Early Withdrawal from Your 401K

. If, on the other hand, you start a SEPP when you’re only 50, withdrawals will continue for 9 ½ years (since retirement age comes after five years). The younger you are when you start receiving payouts, the more you will deplete your retirement fund since you must continue to draw annually and you can no longer contribute to the account. So whatever your reason for tapping your 401K, it pays to be aware of the pros and cons of such a maneuver.

Sarah Danielson writes for a Canadian financial blog with an emphasis on careers, real estate, politics, and banking.