Limited Early Withdrawal Options
If you’re in dire need to withdraw money from your 401(k) account, you should know you don’t have that many options. There are a few exceptional cases but generally, the IRS does not allow 401(k) distributions before the age of 59 ½ or before your plan is terminated.
You might also be able to take money out if you become disabled, get fired, leave your job or if you experience serious financial difficulties. According to the IRS, you are not eligible if you have financial hardships that are voluntarily incurred or reasonably foreseeable.
On top of that, if you do manage to access your money earlier, in addition to paying the ordinary income tax on the entire amount, you’ll also have to pay a 10% early withdrawal penalty.