I'd appreciate pointers to references on how to (or how not to :-) use funds from from one's 401(k) in order to pay education expenses for oneself--particularly, how to incur minimum penalties or other costs. What I mean, why I ask:

I built a fairly large traditional/non-Roth 401(k) at a previous job. I'm currently unemployed, burning through more liquid assets at a slow but steady rate. For various reasons, I'm contemplating getting some additional education in a specialized subfield of my current one. Unfortunately that would cost more than my current savings would allow, but should be within reach if I do one of 2 things, in declining order of precedence:

  1. cash out my 401(k). Obvious problem here is penalties for early distribution. "I've heard" that one can use 401(k) funds for education purposes, but dunno if this is mere urban legend.
  2. take on education debt. This has obvious problems; less obvious is the fact that I'm currently completely debt-free and very debt-phobic.

Hence I'd appreciate best references on how to take 401(k) early distribution, and especially references (or just advice, in the absence of specific references on this topic) on how to do so for self-education expenses. (And, yes, I'm aware of the potentially quite harmful effect on my retirement.)

1 Answer 1


It sounds like you understand why this is a dangerous idea. That aside, you should first consider whether you qualify for a hardship withdrawal:


(archive.org'ed here). Note that not all retirement plans are required to offer hardship withdrawals.

  • Steve - please re-read the question - "I'm currently unemployed, burning through more liquid assets at a slow but steady rate.", your reference to hardship withdrawals doesn't apply. More important, while the article you linked is great, a link-only is bad practice. Link rot is real, and an ongoing issue for any website. Please add a summary of that article, either in the form of a citation or the main ideas in your own words. Commented Mar 26, 2016 at 11:33
  • @joetaxpayer: 'Link rot is real' True that, though the IRS seems to rot less than some other agencies (EPA being notorious for website refactoring sans forwarding). Fortunately, the page has been repeatedly crawled by archive.org, with the current-latest save being 19 Jan 2016, so I edited to point to that.
    – user40314
    Commented Mar 27, 2016 at 22:31
  • The irs had a site update a few years back. It took me weeks to clean up all the links I had from my blog to their site. I have over 1000 posts and get alerts when links go bad. It's a near daily occurrence. Commented Mar 27, 2016 at 22:37
  • @joetaxpayer: archive.org is your friend :-)
    – user40314
    Commented Mar 27, 2016 at 23:15

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