In-service withdrawals refer to taking money out of your 401(k) or other retirement plan while still employed. Most of the time, in-service withdrawals are typically taken if you're in a financial hardship and need funds quickly. In-service withdrawals are special distributions from the 401(k) account that occur while the employee is still employed.

In-service withdrawals are only available for people with a qualified 401(k) retirement plan. Distributions are typically limited to people who need a financial hardship to address basic living expenses, such as food, shelter, medical bills, or tuition. With pf withdrawal, employees do not incur any penalties or taxes.

In some cases, which usually depend on the specific plan, employees may also take in-service withdrawals based on certain events. These events could include turning 59½, becoming permanently disabled, or reaching the age of retirement. Typically, these events are outlined in the plan document or summary plan description.

In-service withdrawals are not the same as hardship withdrawals. With hardship withdrawals, the money distributed is taxed at the employee's normal rate and it also is subject to a 10 percent early withdrawal penalty. In-service withdrawals are not subject to any taxes or penalties.

In-service withdrawals are advantageous because they provide employees with access to funds without the need to become completely separated from their employer, as would be the case with a traditional withdrawal. They also provide a way for employees to access money that would otherwise remain tied up in a plan for years.

In-service withdrawals can help employees who are in need of cash but who are unable to meet the requirements for a traditional withdrawal. However, it is important to note that taking in-service withdrawals from your retirement account may reduce the amount of money you have saved for retirement. Therefore, it is important to be aware of the tax and penalty implications and plan accordingly.