If you have a 401(k), you won't be able to access the funds until you reach age 59 1/2. However, certain circumstances may qualify for a penalty-free hardship distribution. Even if you are eligible for the withdrawal, you'll have to pay taxes and a 10 percent penalty. Unfortunately, an apartment rental down payment doesn't count as a hardship for a 401(k) withdrawal.

The Employer's Role

Employers decide whether or not a 401(k) plan will allow distributions. Although most do offer them, it isn't a legal requirement. If your employer didn't elect to allow hardship distributions, you won't be able to take a hardship withdrawal regardless of the circumstances. The employer can't make exceptions under any circumstances. If the plan does allow hardship withdrawals, there are strict Internal Revenue Service guidelines that determine what qualifies as an eligible hardship.

IRS Criteria

The Internal Revenue Service sets the criteria that all employers must follow when determining whether or not to allow a hardship distribution request. First, the withdrawal must be used to satisfy an immediate and severe financial need of yourself, your spouse or your dependent. The amount can't be more than the hardship. Although you can't take out more than what is needed to end the hardship, you can withdraw extra to cover the related penalty and taxes. You can't have any other resources that could be used, including assets in your name, your spouse's name or your minor children.

Qualifying Hardships

The IRS only deems certain expenses as dire enough to qualify for a hardship distribution. Expenses include certain medical expenses, tuition and other related education fees and burial and funeral expenses. Although you can't withdraw funds for a rental, you can make a hardship distribution to purchase a home. You can also tap into the 401(K) to prevent foreclosure or an eviction from your primary residence, which can include an apartment.

401(k) Loan

A 401(k) hardship distribution comes with a hefty penalty. Even if you have a qualifying hardship, you won't be able to make contributions for six months. An alternative to the distribution is a 401(k) loan. If your plan offers the loan option, you'll need to establish a repayment plan, which usually ranges from one to five years. You can expect to pay a one-time loan origination fee along with the interest charges on the amount borrowed. If you default on the loan, it will be considered a withdrawal, and you'll face the IRS 10 percent penalty and income taxes.