- 1). Review your most recent 401k statement, or log on to your account if you have online access. Check the balance of your 401k and determine how much you need to withdraw to pay off your bills.
- 2). Contact the human resources department at your employer's office. Ask if the company's 401k plan includes a loan provision. Taking out a loan against your 401k balance allows you to avoid the tax penalties that would otherwise apply to premature withdrawals.
- 3). Obtain a 401k loan application from your employer. Complete the application, including your name, address and Social Security number. You will also need the account number from your 401k form.
- 4). Indicate on the loan form how much money you want to borrow, and how you want to receive the funds. Depending on the plan, you might be able to request a check or an instant bank transfer.
- 5). Review the loan form carefully and make sure you understand the terms and conditions. One danger with a 401 loan is that you might need to repay it in full if you leave your employer before the balance is paid back.
- 6). Contact the administrator of your 401k directly if your company does not offer a loan option. Inform the representative that you wish to withdraw money from your 401k, and indicate how much you want to withdraw. Keep in mind that you will be subject to a 10 percent early withdrawal penalty if you are not yet 59 1/2. You will also be responsible for paying ordinary income taxes on the money you withdraw.
- 7). Pay your debts with the money from your 401k plan. Once your debts are paid in full, you can focus on rebuilding your nest egg and your retirement funds.
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