[jriley]

Congrats on committing.

Do be aware you may owe regular income tax on the distribution as well as the 10% penalty.

For others looking to tap retirement capital you might research self-directed IRAs and 401ks. I don't have one but considered it for a real estate deal recently.

Quick Tax Reference: http://turbotax.intuit.com/support/iq/Less-Common-Income/Wit...

[TomatoTomato]

Not necessarily, if this is a Roth-401(k), then there are certainly penalty free distribution options for your personal contributions. If not, there are legal, but backdoor, ways of "investing" your traditional-401(k) into the newly found startup corporation (a family member did this recently). I think you can also take loans against a 401(k).

Either way, please consult a CPA before taking any action.