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I agree with the others that advised against using your retirement fund for things other than retirement. There's an exercise that you might want to go through before you decide.

Figure out what you will need to put aside each month to make up for the diversion of the funds. Here's an example:

You have $5,000 in the fund. Invested at 10%/year compounding annually, that grows to $54,173 in 25 years. Now, to end up with the same $54K in 25 years, you could also put $41 per month into a tax-deferred retirement account. If you wait 5 years before you start putting the extra $ away, the number jumps to $72 per month. Wait 5 more after that, it jumps to $131.

You can look at this and say, "Well, I can save more by paying the debt down because the rate is higher.". That works except there are a couple of things to be aware of. (1) If you don't have the discipline to actually make those monthly contributions to savings, you never catch up. (2) The money you contribute to catch up with limits your ability to put other money away (into tax-deferred accounts) because you run into the $2000/4000 annual contribution limit.

When you figure out all of the long-term ramifications of cashing out the retirement account (tax hit, cost to recover, impact on future savings), what you might find is that, although tempting, it may be a better long term deal to just work through your current situation without using the retirement money.

Good Luck.

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