Expert Retirement Planning

When struggling financially it can be tempting to dip into your 401(k). If you are under 59.5 yrs of age, this is an option that should be given some consideration, as it could cost you dearly. You will miss the compounding interest you would otherwise receive as well as being penalised with early withdrawal penalties.
Cashing out your funds completely is essentially like resetting the clock on your retirement date
Most major companies offer a loan provision on their 401(k) plans that allow you to borrow against your account and repay yourself with interest.  Most will let you withdraw no more than 50% of your account value. Loan repayments then get taken out of your paychecks, with interest.
You may wish to make a withdrawal after the onset of sudden disability, money for the purchase of a first home, money for payment of higher education expenses, money for payments necessary to prevent eviction or foreclosure, or money for certain medical expenses that aren't reimbursed by your insurer. You may also be able to make withdrawals for certain hardships, though you will still incur a 10% penalty and owe ordinary income taxes.
Drawing from you 401(k) can be an easy way to obtain a loan, but certainly does not come without sacrifice. Some companies restrict you from continuing to contribute to your 401(k) while you're paying back a loan, which could force you to miss out on more money. Loans must be paid with after-tax money, and you must pay income taxes plus a 10% penalty.
You also need to consider what would happen in the event of you becoming unemployed. Whether you quit, or get laid off the loan becomes due immediately. It could be rather stressful to find yourself unemployed with an imminent loan on your hands at the same time.
IRS rule 72(t) provides one way to take early 401(k) withdrawals without penalty. You must take a fixed amount of money out for five years or until you reach 59-1/2, whichever is longer. The annual withdrawal amount is based on your life expectancy.
If you choose 72(t) payments when you're much younger than 59-1/2, the deal you get isn't as good. Someone who began 72(t) withdrawals at age 40, for example, would only get a small amount (because her life expectancy is long) every year, and pay income taxes on it for the next 19-1/2 years