During the past year, the cash flows of many households were shortened due to the economy. One of the first resources that was used to supplement the short-fall was a retirement account. This may seem like an easy decision considering the difficulty of making ends meet. However, before the first loan or withdrawal is taken from the account, there are a few figures to consider. In order to encourage saving for retirement, the government imposes a 10% early withdrawal penalty on distributions taken from a Roth or traditional IRA and 401(k) before age 59 1/2. The government waives the penalty if the money is withdrawn to pay for specific expenses. These specific expenses are best explained by a financial professional who can ensure the proper measures are taken before withdrawing funds. A 401(k) offers another option: plans loans can be taken from a 401(k) if the plan document permits the loan. The amount of the loan depends on the specific vested accrued benefit and previous loans. Due to the specific parameters of the plan loan amount, seek professional advice. However, an important thing to consider is the repayment of the loan. A typical loan must be repaid within 5 years; it may be extended if the loan was used for a first time home purchase. If employment with the company terminates before the loan has been entirely repaid, the loan balance may face the income tax and the 10% early withdrawal penalty. Typically, when on leaves employment, the account balance of a retirement plan is rolled over to new plan. The outstanding loan balance must be deposited into the new account within a certain time period. Each plan is different when it comes to loans; therefore, read over the plan document to see what would happen in this event. Careful consideration should be used before one decides to use their retirement account during times of financial distress.