My daughter has 401k through vanguard. She is recently separated from her husband and is trying to raise and support two boys, she really needs to be able to withdrawl some of her money to start a new. She is in a financial fix. She was told she has to get proof she is going to be evicted before she can even get funds. What kind of since does that make? Why should anyone in her position have to be on the edge of losing everything before getting help with their own money? She just wants to downsize and have a cushion to stay on track without feeling like your drowning. Its bad enough for the position your in, not to mention of having to beg, fight for something that is ready yours

It makes a lot of sense. A 401(k) was designed to provide for income during retirement. It gives tax breaks to people in order to do so. Therefore there are restrictions on being able to get at that money so that people just don't use it as another savings account.

If the 401(k) is with her current employer, she may be better off taking a loan against it. A 401(k) loan is generally a sweetheart deal, because while you do pay interest on the amount you are paying it to yourself. The full payment of the loan goes back into her account. This way there is no tax consequence or penalty to the loan and no need to qualify under hardship rules.

I second Scotrt's suggestion, assuming that your daughter is employed and working for the company where the 401(k) account is. Besides not having to pay income tax, another advantage of taking the loan as opposed to a withdrawal is that there is no 10% early withdrawal penalty like there would be if she took the withdrawal. But unfortunately If she has left her job she won't be able to do this. If this is the case one option is that she roll her 401(k) into an IRA, and then take the withdrawal from there - she'll get clobbered with both income tax and the 10% penalty, but at least she could get at her money that way.