Early Withdrawal Calculator

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:

  • Amount you plan to withdraw
  • Your planned retirement age
  • Your date of birth
  • Assumed annual rate of return on retirement investments (any percentage from 1%-8%)
  • Your current federal income tax rate based on the percentage you enter.  If you do not know your federal income tax rate, the tool will estimate it based on the current annual salary that you enter, as well as  other information about any deductions to your gross annual income that you provide
  • Your current annual salary

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
  • Loss of potential asset growth

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 12. Some exceptions may apply. You should consult your tax advisor to determine your specific tax situation. (Additional Information: As part of the CARES Act, coronavirus related distributions, made in 2020, are not subject to the 10% early distribution tax. Please note no changes have been made to the Early Withdrawal Calculator to exclude the tax and the illustration will continue to include the early withdrawal distribution tax.)

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:

  • Apply any assumptions about state taxes
  • Apply any assumptions about inflation
  • Predict returns.  The tool uses the rate of return you entered, which you may have based on historical performance of your retirement account. Past performance is not a guarantee of future returns.
  • Consider whether you might have alternative sources of money available other than withdrawing money from your retirement plan. You should evaluate your options prior to making a withdrawal.
  • Include or identify any specific investment alternative or distribution option available under the plan or IRA, unless such alternative or option is specified by the plan participant, beneficiary, or IRA owner.
  • Take into account any impacts resulting from the possibility of your plan provider suspending contributions for a period of time after a withdrawal is taken.  You should consult with your employer to determine if contributions could be suspended as a result of taking an early withdrawal.
  • Consider the specific rules of your employer’s plan.

Please answer the following questions:

+ Reason for Withdrawal is for internal tracking purposes only and is not considered in your calculation.

This Tool is Educational

This material is for informational or educational purposes only and does not constitute investment advice under ERISA, a securities recommendation under federal securities laws, or an insurance product recommendation under state insurance laws or regulations. 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, as an offer to sell or a solicitation to buy or hold any securities, as a recommendation of any securities transactions or investment strategy involving securities (including account recommendations), a recommendation to rollover or transfer assets to TIAA or a recommendation to purchase an insurance product. 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 or insurance product purchase or contribution 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 your specific objectives or circumstances, or suggest any specific course of action. Investment, insurance product purchase or contribution decisions should be made based on your 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.