Its amazing to me how uninformed so many people are when it comes to there 401K. Here are some of the comon questions and missunderstandings about 401Ks this info comes from a pretty nifty site all about 401ks here is the link for the 401K Withdrawal rules i listed below .
401k Questions Rules

Economic conditions worsen each day, and many people are becoming more and more concerned with not only their financial situations, but their financial future. The 401k questions rules are a subject that employees and business owners are inquiring into with more aggressiveness than before. One of the 401k questions rules has to do with 401k withdrawals, and the rules that apply. Generally, distributions of contributions cannot be made until you die, suddenly become disable, terminated from your job, the 401k plan is terminated by the employer, or you reach the age of 59 ½ or have financial hardships.
401k questions rules are applicable and helpful as most people are hoping to withdraw funds from their 401k plans and are looking for guidance on the hardship 401k withdrawal rules. These rules are intended to assist and instruct so that no costly mistakes are made that will inevitable cause financial difficulty down the road.
By law, hardship withdrawals are allowed, but plan sponsors are not required to provide this particular option. As indicated by the IRS, many 401(k) plans, however, do allow employees to make a hardship withdrawal because of immediate and heavy financial needs. Generally, hardship distributions from a 401(k) plan are limited to the amount of the employees’ elective deferrals only, and do not include any income earned on the deferred amounts. Hardship distributions are not treated and handled as eligible rollover distributions.
Other 401k questions rules concerning hardship withdrawals might include: What does the IRS code that governs 401(k) plans provide for hardship withdrawals?

1. the withdrawal is based on an immediate and heavy financial need;
2. the withdrawal is necessary to satisfy that need (i.e. you have no other funds or way to meet the need);
3. the withdrawal amount does not exceed the amount needed by you;
4. under the 401k plan, you have acquired all distribution or nontaxable loans.

Information on 401(k) hardship and withdrawal rules can be daunting to say the least. A question was raised concerning a 55 year old man who asked if he could withdraw his 401k without penalty as long as he was leaving his job and if this is true for all 401k plans. Are there any specific reasons someone has to have for withdrawal without penalty?
The answers to these questions are in the rules. A 401k plan is a type of tax-qualified deferred compensation plan where an employee can decide to have the employer contribute part of his or her cash wages to the plan on a pre-tax basis. Since they were not included in the taxable wages on this man’s Form W-2, these elective deferrals are not subject to income withholding at the time of deferral. Although, Medicare, social security and federal unemployment taxes are included as wages and are subject to withholdings at the time of deferral.
401k questions rules can be researched over the internet, or discussed with a financial planner. Take the time to educate yourself on these rules, keep yourself updated on the latest laws and penalties, and always talk with your employer on any changes that might be made concerning your 401k plan.



I would encourage everyone to make sure they understand the way their 401k plan works! the site i listed above gives some help but do your research and ask around. This is important!

In very simple terms, 401(K) plans are tax-deferred retirement savings plans for employees. The employer sets them up and each company has a slightly different 401(K). They are part of a family of retirement plans known as "defined contribution" plans - the amount contributed is defined by the employer or the employee. 401(K) gets its name from the section and paragraph of the Internal Revenue Code - section 401, paragraph K.

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very good article.401k plan is very important to everyone.

Yep... Know what it is... Have several floating around from previous employers, but they have taken a HUGE hit over the last 2 years. Finally they are starting to rebound.