Suppose you have a $401($k$)$ plan, and you would like to draw the money out when you are age $45.$ You want the money to send your child to college. What will happen if you draw all the money out and close the account?

You will have to pay income taxes on the withdrawal.

You will have to pay income taxes, plus a tax penalty, on the withdrawal.

You will receive the money tax$-$free, since you paid taxes on it when you deposited it$.$

You will only have to pay taxes on the amount of money drawn out that represents interest earned on your deposits.