<prompt> Human: We just had our annual insurancebenefits meeting at work and this topic always jogs my mind. Should I max out my 401k if I would like to retire early say age 40?I know there are tax penalties if you early withdraw but would they be offset by my tax savings now?For example... lets say my current effective tax rate is 20. I want to contribute an additional 10,000 into my 401k this year. I would be saving 2,000 in taxes. Repeat until age 40.I retire at 40 and for whatever reason I needed to take out my 401k money before 59-12. My income is now 0 therefore my effective tax rate would be approx 10 for the first 10,000. Lets say I want to take out 10,000. I would get hit the 10 early withdrawal penalty and 10 for the taxes assuming this was my only income for the year. Im left with 8000.To recap, I put in 10,000 with an effective tax rate of 20, save 2,000 in taxes. Withdraw 10,000 with an effective tax rate of 10 and 10 penalty, and end up with 8,000.Am I thinking about this correctly?Update: You guys are mentioning the Roth Conversion Ladder; I believe this is what I need to be reading about. Thank you so much!  <response>: The most common strategy espoused on bogleheads, rfinancialindependence, madfientists blog, and Mr Money Mustache Forum to access 401k money in early retirement is what is called a Roth Conversion ladder. It requires you to have enough savings in regular taxable accounts to last you 5 years of early retirement. It takes advantage of the fact that Roth conversions from tIRAs can be withdrawn penalty free after 5 years. thsi doesnt involve 72t distributions.You simply roll over the balance of the 401k to a traditional IRA once you begin early retirement. That first year of retirement, convert 1 years of expenses plus a bit for inflation from that IRA to a Roth IRA. You will be able to withdraw that amount in 5 years penalty free. Do the same thing every year moving forward.The extra advantage of this is the fact that you probably have little to no taxable income in those first few years of retirement, so you will be taxed very little on the Roth conversion. Some married people with low expenses only have to convert less than their standard deduction and personal exemptions, effectively allowing them to access their 401k completely tax free. 