I only want to take a withdrawal from my 401K periodically starting in January, until or if I can find other employment. I have expenses coming up that need to be paid, like health insurance premiums, medical bills, living expenses and enough to live on.

I qualify for unemployment but have not filed yet. I don't know if I can draw that and withdraw enough to cover the above expenses at the same time. Unemployment will not be enough on it's own to cover these.

Withdrawal age is 59 1/2. I don't know of exceptions to this, but you can contact a tax adviser to be sure

I found the answer on the IRS site:

Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income.

Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:

*
Made to a beneficiary (or to the estate of the participant) on or after the death of the participant.
*
Made because the participant has a qualifying disability.
*
Made as part of a series of substantially equal periodic payments beginning after separation from service and made at least annually for the life or life expectancy of the participant or the joint lives or life expectancies of the participant and his or her designated beneficiary. (The payments under this exception, except in the case of death or disability, must continue for at least 5 years or until the employee reaches age 59½, whichever is the longer period.)
*
Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55.
*
Made to an alternate payee under a qualified domestic relations order (QDRO).
*
Made to a participant for medical care up to the amount allowable as a medical expense deduction (determined without regard to whether the participant itemizes deductions).
*
Timely made to reduce excess contributions.
*
Timely made to reduce excess employee or matching employer contributions.
*
Timely made to reduce excess elective deferrals.
*
Made because of an IRS levy on the plan., or
*
Made on account of certain disasters for which IRS relief has been granted.

Reporting the tax. To report the tax on early distributions, a participant may have to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. See the Form 5329 instructions for additional information about this tax.

The quick answer is yes, you can make a hardship withdrawal without penalty if:

1. You are 55 years of age or older.
2. Loss of employemnt income due to layoff, termination, retirement, voluntary resignation during or after the year in which you turn 55 years of age.
3. You agree to accept equal distribution payments that will last for 5 years or until age 59 1/2, whichever is longer.
No lump sum distributions allowed. The equal payments would need to continue beyond age 59. 1/2 years.

The quick answer is yes you can avoid the penalty and acces your 401k money if:

1. You at least turned 55 years of age during the year in which your employment relationship ended by resignation, termination, layoff or retirement.
2. You agree to equal periodic distribution payments that will continue for either 5 years or until you reach the normal qualificaiton age of 59 1/2 year, whichever is longer.
3. You understand lump sum distributions are not allowed.
4. You understand the payments must continue beyond the previously required age of 59 1/2 years in order to satisfy the 5 year equal payment rule.

Consult IRS for explaination of the term "periodic."