Yes.
It's a Roth 401K, so most of it is not taxable or subject to penalty. You will not owe a 10% penalty on the entire amount. You will only owe tax & penalty on the interest portion. The contributions portion of a Roth may be withdrawn, at any time, tax & penalty free.
The IRS makes a distinction between what they call qualified and nonqualified distributions. According to the 5-year rule, for a distribution to be qualified, or not taxable or subject to penalty, you have to have held your Roth IRA for a period of five tax years, and meet one of the following conditions:
- You must be at least 59½, or
- You use the money to pay for a first-time home ($10,000 lifetime cap), or
- You become disabled, or
- The distribution is made to a beneficiary or to your estate after you die.
In general, if you withdraw money from your Roth IRA before you've met the 5-year holding period and/or before you reach 59½, not only is the earnings portion of the distribution taxable, but you could be subject to a 10 percent penalty on those earnings unless the distribution is used for one of the following exceptions:
- Qualified higher education expenses for yourself and/or eligible family members,
- Unreimbursed medical expenses that exceed 7½ percent of your adjusted gross income, or
- Health insurance premiums if you're unemployed.
You can also avoid the 10 percent penalty if the distribution is:
- Made in substantially equal periodic payments over the period of your life expectancy, or
- Due to an IRS levy of the qualified plan.
