Personal circumstances may leave you strapped for cash and wondering where to get funds in a hurry—say, to help pay for a medical emergency or some other unexpected trouble. And although it’s hardly an ideal solution, one possibility is to take a hardship withdrawal from a 401(k) plan. As required by the Pension Protection Act of 2006, Uncle Sam  recently issued regulations governing such distributions.

Normally, early withdrawals from an employer-sponsored retirement plan can be made only when you leave a job, the plan is terminated, or you die or become disabled. But the law also allows hardship withdrawals, defined as distributions made because of an “immediate and heavy financial need.” Even then, you’re permitted to take only the amount you need—no pulling out an extra $25,000 for a vacation to Hawaii. And just because it’s an emergency, the government isn’t about to let you escape the tax hit that comes with early withdrawals from retirement plans. Your distribution will be taxed as ordinary income, and you’ll also owe a 10% penalty if you’re under age 59½ (unless you qualify for a special exception). So don’t forget to take tax consequences into account.

Keeping all of that in mind, an employee is allowed to take a hardship withdrawal for any of these reasons:

• To pay medical expenses for the employee, spouse, or dependent

• To pay college tuition for the employee, spouse, or dependent

• To purchase a principal residence for the employee

• To repair accidental damage to the employee’s principal residence

• To make a payment to avoid eviction or foreclosure on the employee’s principal residence

• To pay burial or funeral expenses for the employee’s parent, spouse, or dependent

Under the IRS regulations, the rules for hardship withdrawals have been expanded to allow the employee to take a distribution for that worker’s “primary beneficiaries” under the plan. For this purpose, a primary beneficiary is any person named as a plan beneficiary who has an unconditional right to at least part of the account balance if the plan participant dies.

While this change gives plan participants more flexibility over withdrawals, it’s never a good idea to use retirement savings for any other purpose, and this option should be considered only as a last resort. A better option, though also a last resort, is to take out a loan from your 401(k) plan. While you’ll miss out on investment opportunities during the time of your loan, the damage to your retirement savings will be contained, since you’ll have to pay back your retirement plan with interest.