I want to take a hardship withdrawal from my 401K. After going through a divorce and a large portion of my salary going towards alimony, then a 20% pay cut due to the economy I can no longer pay all my bills. My total take home is barely enough to cover my rent, let alone food, car, electric bill, and previous debt. It is an immediate need. My question does the IRS provide for a withdrawal in this situation? If I take a loan against my 401k then I have to pay that back as a salary deduction so that my take home would be even less! My plan administrator says I can not take a hardship withdrawal? Is this true?

It's probably true. Plans vary, so I can not say whether your plan does or does not allow a withdrawal in this case. However, the IRS has set several conditions under which all plans MUST allow withdrawals - these are known as the hardship cases. Unfortunately, you do not meet any of the defined hardships - needing the money to pay bills does not qualify.

Here is the complete list of "hardships" a defined for 401(k) withdrawals:

The exceptions and reason codes to the 10% penalty rule for people under 59-1/2 years of age include withdrawals that are:

1. Un-reimbursed medical expenses for you, your spouse, or dependents.
2. Purchase of an employee's principal residence.
3. Payment of college tuition and related educational fees and expense such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
4. Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
5. Funeral expenses
6. Repair of a primary residence.

Finally - keep in mind that even if you qualify for a hardship withdrawal you would still have to pay the 10% early withdrawal penalty on top of regular income tax. You should reconsider whether taking a loan would be the way to go.

I am behind on some bills and need to get like 2500 to get cought up I've got some loans and doctor bills that are behind