A withdrawal is a permanent hit to your retirement savings. By pulling out money early, you’ll miss out on the long-term growth that a larger sum of money in your 401(k) would have yielded. Though you won’t have to pay the money back, you will have to pay the income taxes due, along with a 10% penalty if the money does not meet the IRS rules for a hardship or an exception. A loan against your 401(k) has to be paid back. If it is paid back in a timely manner, you at least won’t lose much of that long-term growth in your retirement account.