Generally, anyone can make an early withdrawal from 401(k) plans at any time and for any reason. However, these distributions typically count as taxable income.

If you're under the age of 59½, you typically have to pay a 10% penalty on the amount withdrawn. The IRS does allow some exceptions to the penalty, including:

• Total and permanent disability.
• Unreimbursed medical expenses (greater than 7.5% of adjusted gross income).
• Employee separated from service at age 55 or older (age 50 for most public safety employees) but only from the plan at the job you are leaving.

Some 401(k) plans allow participants to take hardship distributions while you are still participating in the plan. Each plan sets its own criteria for what constitutes a hardship, but they usually include things like:

• Medical or funeral expenses
• Avoiding eviction or foreclosure
• The cost of repairing damage to the employee's home

Hardship withdrawals don't qualify for an exception to the 10% early withdrawal penalty unless the employee is age 59½ or older or qualifies for one of the exceptions listed above.

Are there exceptions to the early distribution penalty on an IRA?

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