Yes - whatever amount you have vested, but you will get hit with penalties and taxes.

ehhhh thats pretty risky, plus you have to pay taxes on what you take out, which sucks.

oh, to add a bit more, my ex husband too out all of our 401k money to try and hide from me a year ago. We ended up PAYING 16,000 dollars in taxes and penalties. So much money just wasted. It makes me sick to think about it. I know thats a different situation that yours but still, the taxes and penalties are the same.

That would be a big mistake, especially now because the housing prices have just begun to drop. They could as much as 50% lower over the next few years. Never look at a house as an investment. Your 401K should not be touched until you retire. Also, if you cash in your 401K early, there is a huge penalty.

It is possible to convert your 401K vested amounts into a IRA. The IRA trustee (NOT you) could then buy real estate (e.g. an investment house) with the funds. This, however, has a lots of complex rules (you nor your family can use the house; there has to be enough cash in the IRA account to handle all expenses (taxes, insurance, utilities, etc.)) plus the IRA trustee would want a size able fee to handle this. Unless the rate of return is very high, it does not seem to be a good idea.

Real Estate has grown approximately 7% per year since the 1960's. The Stock Market has grown approximately 12% per year since that same period of time. Why would you want to own real estate instead of stocks? Do you like getting up in the middle of the night to fix leaking pipes? Please read my profile.

If you are the owner of the business and make the decisions to modify the investment options then yes you can use your 401k to do this. But if you're just an employee then you'll have to become UNEMPLOYED first (ie eligible to take a distribution).

However, take Auntie Mame's advice....it's not a good investment vehicle and it's easy to mess it up and have it become a taxable event. And when she says there has to be enough cash to handle the expenses that's what she means...remember there can only be an infusion of $5000 / year into an IRA. So if taxes, expenses, and fees are higher than that you're going to be in trouble and maybe forced to sell at the wrong time. If you own the company then opening it up to this option for you also opens it up to your employees...and the plan will be on the hook for making sure it's all done on the up and up. And if it messes up then YOU are personally liable as the plan administrator.