From finaid.org:
Quote:
Hardship Withdrawals from Your Retirement Plan
You can make a hardship withdrawal from your 401(k) to pay for college tuition and related expenses (including room and board) for yourself, your spouse, your dependents, and children (including children who are no longer dependents). The withdrawal must be to pay for the educational expenses and you must have no other way to pay for the expenses. You must have also have already obtained any distribution or loans available to you under the 401(k) plan. However, the withdrawals will be subject to income tax. If you are not at least 59-1/2 years old, there will also be a 10% early withdrawal penalty. You will also be precluded from contributing to the 401(k) plan for the six months following the withdrawal.
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I think this is a really, really bad idea, though I generally think that taking money out of a retirement plan for any reason other than retirement is a bad idea.
A 401k loan would be preferable (though I don't like those either). That way, you don't pay income tax and a 10% penalty on the money. Based on this text, you can't do a hardship withdrawal unless you have already taken a loan anyway.
Keep in mind that with a withdrawal, because of taxes and penalty, you'd actually need to cash out about $15,400 to be left with $10,000. Then you wouldn't be able to contribute for 6 months. This would put a huge dent in your retirement savings. I'd be looking for any possible source of money rather than the 401k withdrawal.