Whenever you take money out of a tax-deferred retirement plan such as a 401(k) or 403(b), you always owe Federal income tax.
But if you withdraw money before age 59½ you also owe a costly 10% penalty. That is, unless an early distribution rule applies.

Three common early distribution exceptions are death, disability and incurring significant medical expenses. A fourth and less well-known exception is for participants in a company’s 401(k) or 403(b) who are 55 or older when they leave their job. The penalty is waived if they take money out before age 59½.

Be very careful when using the age 55 rule. You must be 55 or older when you leave your job (called “separation from service” in the IRS code). If you leave the job before age 55 and wait to take distributions after age 55 but before age 59½, you still owe the 10% penalty. So before doing this it’s best to consult with your accountant or financial professional.