In this economy where the Middle Class is getting crushed, yet have savings in 401k accounts, it would be a great relief if 5% to no greater than 10% were allowed to be withdrawn per year without obligation to either be paid back or be penalized.
We have seen banks bailed out; CEOs who have created this mess allowed to keep their bonuses, use bailout money to take expensive trips, and yet nothing for the Middle Class whose money they squandered.
It is understood that withdrawing from your 401k is playing with your retirement, but in an emergency, there is no reason why withdrawing 5 to 10 percent taxed normally when added to your wages at the end of the year, without the 10% penalty cannot be done.
That could be the difference between living in your home, or living on the street.