Ok I am 40 years of age and worked 12 years for the same company and got hurt on the job. I had to have a disc replacement and now disabled and applying for SS. I have a 401k with the company but I, see you get a early withdraw penalty. So should I try and with draw it myself or should I get a tax person to help me with it because I read that the penalty can be waived for some one who is disabled? Any info would be greatly appreciated...

A disability waiver (of the 10% penalty) is possible but check with the custodian of your 401k and the IRS before making any assumptions on your own. If I remember correctly, the IRS requires one to be "totally disabled" for the 10% penalty to be waived. There are also other possibilities, such as setting up a 72t arrangement, which permits consistent annual withdrawals, based on your life expectancy. If this sounds interesting, you can ask the experts here: Welcome to 72t on the Net (http://72t.net/)

What about your workers comp benefits from the injury?

If I remember correctly, the IRS requires one to be "totally disabled" for the 10% penalty to be waived.

You are allowed to make a withdrawal from your 401(k) without penalty if you are totally and permanently disabled. The IRS defines that as: [he or she] cannot engage in any substantial gainful activity because of a physical or mental condition, and a physician determines that the condition has lasted or can be expected to last at least a year or can lead to death

Call your 401(k) administrator and ask what the procedure is to make a withdrawal. Make sure they know that you are totally and permanently disabled. That way when they send you a 1099-R form at the end of the year they should include distribution reason code 3 on the form, which tells the IRS that you do not owe a penalty.

Of course, you will still owe regular income tax on any distribution.