The amount of tax owed when an individual cashes out of a 401k, either early or at the age of retirement, is based on the individual’s annual income tax bracket as proceeds from an IRA are treated as income.  In other words, the person’s normal tax rate at the time of distribution is applied to the funds.  If your income tax rate is 30% and you withdraw $10,000, then you will owe $3,000 in taxes during the year of withdrawal.