I had no penalties because I withdrew the money to put a down payment on a home, just some small processing fees. I have to pay it back to myself, with interest over a period of time, which is good, because all of the money I put in now will be purchasing undervalued stocks, mutual funds, etc. This is allowed for the purchase of a home, college tuition, and a few other circumstances. I bought the home for 25% less than what it appraised for at the time of purchase, so I think I did OK.