Withdrawing from a 401k early can result in an "all-in hit" of approximately 62% due to combined federal and state taxes and penalties. For a theoretical $10 million distribution, the total tax and penalty burden is calculated at $6,200,077.97, leaving a net after-tax amount of $3,799,922.03. The breakdown includes a 10% federal penalty, a 2.5% California early-distribution tax, and various income taxes.