When considering making an early withdrawal from your retirement savings, it is important to understand the potential impact of such a decision.
The Early Withdrawal Calculator (the “tool”) allows you to estimate the impact of taking a hypothetical early withdrawal from your retirement account, including potential lost asset growth, tax consequences and penalties based on information you specify.
The tool’s results represent analysis and estimates based on the information you have provided, but they do not reflect all relevant elements of your personal situation. These estimates should not be regarded as predictions, advice, or recommendations. The actual impact of your financial decisions may vary significantly from these estimates. This information does not constitute an application, offer or commitment by TIAA, or a representation of interest rates, investment performance or any other future performance. The accuracy of this calculator and its applicability to your circumstances is not guaranteed. You should obtain personal advice from qualified professionals. This information is provided for educational and illustrative purposes only and is not intended to constitute legal, financial, tax, or other advice. TIAA does not provide legal, accounting, or tax advice. Please consult your tax or legal advisors before taking any action that may have tax or legal consequences.
Learn about how the results are calculated based on the assumptions and limitations of this tool
Inputs used to generate the tool’s results
The following information is required:
Note: Although the tool asks you to enter your reason for the withdrawal, this is for internal tracking purposes only and is not considered in your calculation.
Assumptions and methodology used to generate the tool’s results:
The results generated by this tool are:
Impact of Early Withdrawal calculation
The tool illustrates the potential impact of taxes and penalties (if applicable) on the amount of an early withdrawal from your retirement account. Taxes and penalties are assumed to occur for those under age 59 1⁄2. Some exceptions may apply. You should consult your tax advisor to determine your specific tax situation.
Impact of income taxes
The impact of income taxes calculation shows how much the amount of your withdrawal could be reduced due to taxes. Withdrawals from your qualified plan are taxed as ordinary income at the federal tax rate at the time of the withdrawal. The federal tax rate assumed is the percentage you enter into the tool. State income taxes may also apply, but are not assumed by the tool.
Impact of early withdrawal penalty
The early withdrawal penalty calculation shows how much the amount of your withdrawal could be reduced due to penalties. The early withdrawal penalty, if any, is based on whether or not you would be taking the withdrawal from your retirement plan prior to age 59 ½. If you withdraw money from your retirement account before age 59 1/2, you will need to pay a 10% early withdrawal penalty, in addition to income tax. The tool assumes that you will incur this 10% penalty if you are currently under 59 ½.
If you left your employer in or after the year in which you turned 55, you may not be subject to the 10% early withdrawal penalty. There are other limited situations when the 10% early withdrawal penalty may be waived, including but not limited to, permanent disability and medical expenses greater than 7.5% of your adjusted gross income. [You should check with your benefits department for more information about your plan in order to determine whether an early withdrawal penalty applies to you.]
Lost Asset Growth Calculation
The lost asset growth calculation shows how much the amount of your withdrawal could have grown if left in your retirement account until your retirement at the age that you enter. The rate of return assumed by the tool is the percentage you enter into the tool. The future value is calculated from today’s date until the planned age of retirement that you enter. The tool assumes that the single rate of return entered will apply each year (compounded annually) and that funds will remain invested until your age at retirement.
The loss of potential growth is shown pre-tax. It does not take into account any income taxes that might apply when you withdraw the funds at retirement.
Limitations of the tool
The tool does not:
This Tool is Educational
This material is for informational or educational purposes only and does not constitute investment advice under ERISA. This tool is intended to provide you with information to help you make informed decisions. You should not view or construe the availability of this tool as a suggestion that you take or refrain from taking a particular course of action, as the advice of an impartial fiduciary, or as an offer to sell or a solicitation to buy any securities. In making this tool and information available to you, TIAA assumes that you are capable of evaluating the information and exercising independent judgment. As such, you should consider your other assets, income and investments and you should not rely on the information as the primary basis for making investment decisions. The information that you may derive from this tool is for illustrative purposes only and is not individualized or based on your particular needs. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances. The purpose of the tool is not to predict future returns, but to be used as education only. The assumptions underlying this tool are provided here and will change over time and from time to time. Contact your tax advisor regarding the tax implications. You should read all associated disclosures.
Questions? Please contact TIAA at 800-842-2252. We are here to help.