pay a penalty, but you can easily access these deferred contributions. If you are withdrawing money early for certain reasons - purchase of a home, funeral expenses, college expenses, medical expenses, etc. then there is no penalty and you will simply indicate the expense type on your tax return and pay ordinary income tax on the amount your withdrew. To access money in the employer plan one must either apply for a loan, or request a hardship distribution, but you cannot directly withdraw money just for the hel l of it. In an IRA you can -- you just have to pay the piper by paying income tax and a 10% penalty. But maybe that new flat screen t.v. with a 20% discount, or new car with a hefty rebate is worth a 10% tax penalty.