When do they take out taxes on 401k withdrawals?

Taxes on 401(k) withdrawals are typically taken out at the time of distribution. When you withdraw funds, the plan administrator will usually withhold a mandatory federal tax of 20% for pre-tax contributions. If you're under 59½, you may also face an additional 10% early withdrawal penalty unless you qualify for an exception. It's important to note that state taxes may also apply, depending on your state's tax laws.