As a general rule, if you withdraw any funds from a 401 account prior to the age of 59 ﾽ, you will be required to pay a 10% 401 tax penalty. The amount of the tax penalty is also considered income, and must be claimed on the tax return which covers the year the withdrawal was made. You will also be charged early withdrawal penalties as well. The applicable 401 tax penalty and early withdrawal penalty are assessed at the time of the withdrawal. There are exceptions to this that do not incur early withdrawal penalties. Included among them are to prevent the foreclosure of your home, to pay un-reimbursed medical expenses for you or a dependant, or to pay for your own college tuition as long as said tuition is due and payable within 12 months of the withdrawal. These types of withdrawals are considered hardship withdrawals and are not subject to early withdrawal fees. Please note that a tax penalty will still be assessed against your withdrawal amount.