You might check with your tax accountant since you are able to withdraw money from a 401K plan prior to age 59 1/2 without the 10% penalty under certain circumstances. In my case I retired from my employer at age 56 and began drawing a pension. Since I was retired the 10% penalty has not applied to me and I have been using the money in my 401K plan to supplement my regular pension distributions. Check with your accountant to make sure before you take the plunge. Note: this exception does not apply to an IRA only a 401K plan.