While an individual can withdraw funds from his 401(k) plan while still working, doing so results in levied income taxes and a 10 percent IRS early-withdrawal penalty, according to U.S. News & World Report. As of 2016, the only way an individual can withdraw from his 401(k) account before reaching the age of retirement is if he is facing a heavy and immediate financial crisis.Continue Reading
Examples of an immediate and heavy financial crisis that can qualify a person to withdraw from his 401(k) account early include paying medical costs, buying a home, going back to school, paying for a funeral and preventing the loss of a home, notes U.S. News & World Report. Even if a person meets the IRS's qualifications for an early savings plan withdrawal, he may still have to meet his employer's qualifications, which might be stricter than those imposed by the IRS.
As of 2016, employees past the age of 59-and-a-half and are still working are able to withdraw from their 401(k) accounts without incurring penalties, according to U.S. News & World Report. It's still a good idea for employees who have reached the age of retirement and would like to withdraw from their retirement savings to check with their employers beforehand to ensure their eligibility.Learn more about Financial Planning