Many families and individuals rely on 401K plans for financial security after retirement. They provide an easily manageable way to accumulate savings over the course of several decades. There are also a number of complex regulations governing 401K accounts. Several of these regulations are designed to prevent people from using the savings as a bank account. This is why 401K withdrawals are so tightly regulated. Although it is possible to receive money from the account before retirement or age requirements are met, the many penalties surrounding the withdrawal should be considered before making the decision. The large majority of 401K withdrawals are subject to regular taxation as income. In addition to regular income taxes, there is also a 10 percent penalty fee. The maximum annual contribution limit for the 401K does not change after the money is withdrawn. This means that it is not possible to re-deposit the money to restore the account to previous levels. The money that is withdrawn loses all future investment potential. All of these disadvantages make the decision to withdrawal money from a 401K difficult for most families saving for retirement. There are situations where it is better the remove money from savings and accept the penalties instead of losing a home or falling into bankruptcy. Several exceptions do exist that minimize or eliminate some of the penalties attached to a 401K withdrawal. Withdrawals are fine after a person has reached 59.5 years of age. They are also allowed if a person has retired and is older than 55. It is possible to withdraw a specific amount for necessary medical expenses. Individuals who have become legally disabled can withdrawal money without the penalty. Although the 10 percent penalty will not apply in these situations, the money is still taxed as income in most cases. Anyone facing financial difficulties with an active 401K account has several alternate options available that could make drawing on the money easier. The 401K could be converted into a Roth individual retirement account (IRA) that has less stringent withdrawal rules. A better option for long-term savings is to explore the possibility of a 401K loan instead of a simple withdrawal. Both of these methods will save money. They also could take some time and have different benefits and drawbacks.