In addition, as long as you repay your loan on time, you won't be subject to withholding taxes or penalties, as you would if you withdrew from your account before retirement. Withdrawals are a different story. Different plans may allow you to take withdrawals for different reasons. The most common withdrawal type for active participants is the hardship withdrawal. According to IRS regulations, to qualify for this type of withdrawal, your hardship must represent an immediate and heavy financial need and there must not be any other resources reasonably available to you to handle that financial need.
Some plans also allow hardship withdrawals for other reasons.
Check with your benefits department. You will need to show your employer proof of how you intend to use the money, and proof that the amount you requested isn't more than enough to satisfy your need. Generally, hardship withdrawals are not eligible for rollover. Therefore, the mandatory 20 percent federal income tax is not withheld from certain hardship amounts as it is from other taxable withdrawals. The withdrawal will, however, be subject to 10 percent mandatory withholding unless you elect out of withholding.