I'm currently about 3 months behind on my mortgage payment. I've started a new job about a year ago and am trying to make ends meet. This current job has a separate 401k plan, and I still have funds from my last job in a 401k that is less than $7,000. Would it be worth it to withdraw from my previous 401k plan to catch up on my mortgage payments? Any help would be MUCH appreciated. Thanks!

Please be aware that if you do take the $7K withdrawal from the old 401(k) plan you will owe income tax and the early withdrawal penalty of 10%. I assume here that when you left your previous employer you were under age 55. The plan administrator will automatically withheld 20% for federal taxes - whether that amount is sufficient depends on your tax bracket. They will not withhold the 10% penalty amount nor state/local income taxes, so do NOT spend the entire amount that comes in the check - you will have to come up with cash next April for your 2011 tax bills.

Thank you for your response! So the 10% penalty will need to be taken care of come tax time, correct?

The 10% penalty is added to your regular taxes - whether the 20% that they automatically withhold is adequate to cover both regular taxes and penalty is impossible to say without a lot more information. There's also state/local taxes (if applicable), which they do NOT withhold for, so you will have to pay that piece come tax time for sure.