If you have reached retirement age then you will be able to avoid all the fees associated with early withdrawals, but you will still have to pay taxes on your money. It is important to note that you do not have to start manually taking money out from your account until you turn 70 ½.

If you have not reached retirement age then a 401k withdrawal option might not be in your best interest. Any money that you take out of your account will have a 10% penalty attached to it. This means if you take out $10,000 then you will have to pay $1,000 in penalties. On top of that you will of course have to pay taxes on it. It can all quickly add up and become very expensive.

In addition to that this money could have had the potential to grow over the years. So if you can avoid taking money out of your account early it is probably in your best interest to do so.

If you need money right now there is another option, you could take out a loan. The 401k loan regulations allows you to borrow money at a low interest rate while not harming your account. All the money that you do borrow would eventually be put back into your account when you pay the loan back so it would have a very small affect on your account in general. This could be a better option if you have income coming in, but just need some quick cash now.

Whatever you decide to do just remember that any money you take out now will stop working for you. Consider all of the consequences and rewards before making your final decision.