If you’re in need of cash, early retirement plan withdrawals generally should be a last resort. With a few exceptions, distributions before age 59½ are subject to a 10 percent penalty on top of any income tax that ordinarily would be due on a withdrawal. Additionally, you’ll lose the potential tax-deferred future growth on the withdrawn amount.

If you have a Roth account, you can withdraw up to your contribution amount free of tax and penalty. But you’ll lose out on potential tax-free growth.

Alternatively, if your employer-sponsored plan, such as a 401(k), allows it, you can take a plan loan. You’ll have to pay it back with interest and make regular principal payments, but you won’t be subject to current taxes or penalties.

If you have questions about the potential taxes and penalties on early retirement plan withdrawals, contact Doeren Mayhew’s tax advisors in Houston, Michigan or Ft. Lauderdale to determine if there are better options available for meeting your cash needs.