Does 401K Withdrawal Affect Taxes? 
When you withdraw money from a 401 -LRB- k -RRB- it is taxed as a distribution of ordinary income . If you take it out prematurely and you dont meet an exception you will also be subject to a special 10 % surcharge . Remember that money in a 401 -LRB- k -RRB- has not been taxed previously . 