It depends on what you want/need the money for.
Generally, there's never a good time to take money out of a 401k.

Take a look at this site. It has a lot of good information on 401ks.
http://www.401khelpcenter.com/

Unless you are over 59.5 y/o, the best piece of advice anyone can give you is to leave the money where it is (just in case Social Security is just a memory at the time you retire (or should I say INTEND to retire)

1. If you are not yet 59 1/2, any money taken from your 401(k)
plan is subject to
a. a 10% penalty, AND
b. regular tax. (It is treated as regular income)

2. Depending on your employer's policy, you may be able
to borrow against your 401k plan for buying your first house and/or for emergency situations ,etc.

3. You can also roll-over your 401k to an IRA.

if you are still with currently employed with the sponsor of the 401(k) plan you will need to check with your benefits dept to see if the plan allows for loans. you can usually borrow up to 50% of the balance. otherwise, if you were looking to just withdraw the monies you may possibly do so by asking for a hardship withdraw (again, if the plan allows). you can request a hardship withdrawal for the following reasons:

- unreimbursed medical expenses for you, your spouse or dependents.
- to make a down payment to purchase a primary residence.
- tuition and fees for higher education for you (or your dependents if the plan allows).
- to prevent eviction or foreclosure proceedings.
- to pay for funeral/burial expense for a spouse or dependent.
- to pay expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

all of the above would incur a 20%** Federal income tax as well as an additional 10% penalty for early withdrawal.

** you may get some of the 20% back, or you may need to pay more when you file your annual Federal Tax Return the following year after the withdrawal.


you can avoid the additional 10% penalty if you fall into one of the following:

- are 59 1/2 years of age.
- Separated from service in the year you turn 55.
- become disabled (conditions apply).
- If you die (that won't help you)
- Retire prior to the age of 59 1/2 (conditions apply).