I was legally separated last year and had to take on a big load of "joint" debt even though my spouse's salary is about 40% higher than mine. The bills were literally eating up my cash flow. I had to come up with cash or declare bankruptcy. I took an early distribution from a 401(k) account to pay off the debts and keep myself solvent. I know what I did doesn't fall under any of the exemptions that the IRS describes for early distributions. Any one know of any way of avoiding or lessening the 10% penalty? It's not like I used the money to go on a cruise or something. I was basically saving my financial life. IRS sucks!

You should have filed for bankruptcy last year. You could have protected your 401(k) assets, avoided the tax on the distribution and the 10% penalty, and could have wiped out some of the debt. It's not the IRS's fault. You owe the tax and the penalty.

Nope, no way to mitigate the penalty or tax liability.

No, sorry you end up paying it, And I will assume they held out at least the 20 percent income tax when you took it, depending on your federal tax and also state tax, you may owe additional tax on the money also.

All good advice.

And do NOT blame the IRS! Blame Congress, who passed the laws. The IRS is just the enforcer!