Hardship withdrawals are allowed by law but your employer is not required to provide this option in your plan. The cost of administering such a program can be prohibitive for many small companies.\r\n\r\nYour summary plan description (SPD) will state whether or not your employer allows withdrawals in your plan. The IRS code that governs 401(k) plans provides for hardship withdrawals only if:\r\n\r\n \tthe withdrawal is due to an immediate and heavy financial need;\r\n \tthe withdrawal must be necessary to satisfy that need (i.e. you have no other funds or way to meet the need);\r\n \tthe withdrawal must not exceed the amount needed by you;\r\n \tyou must have first obtained all distribution or nontaxable loans available under the 401k plan; and\r\n \tyou can't contribute to the 401(k) plan for 6 months following the withdrawal.\r\n\r\nThe following four items are considered by the IRS as acceptable reasons for a hardship withdrawal:\r\n\r\n \tUn-reimbursed medical expenses for you, your spouse, or dependents.\r\n \tPurchase of an employee\u2019s principal residence.\r\n \tPayment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.\r\n \tPayments are necessary to prevent the eviction of you from your home, or foreclosure on the mortgage of your principal residence.\r\n\r\nHardship withdrawals are subject to income tax, and if you are not at least 59\u00c2\u00bd years of age, the 10% withdrawal penalty. You do not have to pay the withdrawal amount back.