How to Get Your Company to Release Your 401(k) Funds


If you need access to 401k assets, but are still working for your employer, there are two ways to get 401k assets released: distribution or loan. If you aren't yet 59 1/2 years old, distributions are early distributions. The income for the year includes early distributions, which the IRS penalizes 10 percent for the early withdrawal. Loans do not qualify as distributions, so you must repay them back to the 401k under IRS regulations to prevent a distribution.


Call the 401k plan administrator at the number located on your statement.

Request a distribution form.

Complete the distribution form for part or all of the 401k. You can distribute all vested assets. If your employer has contributed to the 401k on your behalf, you might not be eligible for all of it.

Sign the distribution form and submit it to the 401k plan administrator. The plan administrator will process a check or electronic transfer within 10 days of receiving the paperwork.

Obtain the 1099-R in January and use the information to complete your tax returns. Add the taxable portion to your adjusted gross income. Calculate penalties by completing IRS Form 5329.


Call the 401k plan administrator and request a loan form. There is no credit check for the loan; you are borrowing money from yourself.

Complete the form, including how much you need in the loan. The IRS allows loans up to $50,000 not exceeding 50 percent of your vested 401k balance.

Repay the loan per contract terms. The 401k plan administrator will automatically deduct the loan payments with interest from your paycheck. The IRS requires you to completely repay all loans within five years.

Tips & Warnings

  • Not all 401k plans allow plan loans. Check with your plan provider to see what provisions are available to you based on your employer's plan.
  • If you take a loan and lose you job, you must repay the loan in full immediately or the loan balance is a taxable distribution.

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