If you are looking to to pull cash from your 401(k) plan or traditional IRA without getting hit with a penalty, the IRS will allow you to do it.
Generally, taking an early withdrawal from a qualified retirement account — that is, cashing out either of those accounts before age 59½ — results in a 10 percent penalty. In addition, you'll also need to pay income taxes on the distribution itself.
However, not all cash-outs are the same.
The IRS has defined a narrow set of circumstances in which it will waive the 10 percent penalty and permit you to take the early withdrawal. One of the lesser-known circumstances includes receiving a series of equal payments from your individual retirement account or your 401(k), which is known in tax circles as a "72(t) distribution."
Beware: Just because the IRS will allow this penalty-free cash out, doesn't mean you should take it.
"The first overriding factor is 'Never do it,'" said Ed Slott, CPA and founder of Ed Slott & Co. "You will have less money for retirement. It's the last resort unless you need it."
Here's what you need to know about pulling a series of payments from your retirement account.