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If you've reached age 59 1/2, you may have a little-known benefit awaiting you. No, I'm not talking about an AARP membership but—get ready for it—the 401(k) in-service withdrawal option. As unglamorous as that sounds, this benefit is actually a retirement plan escape hatch for those who have reached age 59 1/2. The rule lets you take money out of your 401(k) account for any reason, even if you're still working. No hardship excuses needed. And you don't have to pay a 10% penalty on the money, though you will have to pay income taxes unless you roll it over into an IRA or other qualified account.

How likely is your plan to offer an in-service withdrawal? Pretty likely. Some 85% of mid-sized and large plans offer this option to employees who have reached 59 1/2, according to Pam Hess, director of retirement research at benefits consultants Hewitt Associates. (Bear in mind, plans may impose rules that limit the amount you can withdraw—most will not let you move the entire balance.)

The freedom to move your money into better investments can make huge difference for someone who has seen their portfolio battered just a few years before retirement. And even before the meltdown millions of 401(k) investors have been losing money to high fees or poorly performing funds, as recent Congressional hearings have shown.

Yet few workers have taken advantage of the opportunity to shift their money. A recent analysis by Hewitt found that only 4.7% of eligible employees took in-service withdrawals last year, which is a slight increase over 2007. Still, that's not too surprising, since inertia tends to rule most plan participants. Besides, many don't even know about the option, since few plans publicize it. To find out whether you have the right take an in-service withdrawal, you may need to get your plan's summary plan description, which your employer is legally required to give you.

As tempting as it may sound to break out of your 401(k), you should proceed cautiously, if at all. Many investors, especially those working for large companies, have decent 401(k) plans with low expenses and an array of top fund choices. You may also have access to institutionally priced annuities at retirement, which you would not be able to buy outside your plan. So consider an in-service withdrawal only if you have a truly terrible plan—one that has high-cost annuities, for example, or front-end loads. (To find out more about 401(k) fees, click here.) You should also map out safe, low-cost investments for your IRA that will preserve your nest egg. For a few suggestions, see our recent advice on rescuing your retirement and these tips for creating a retirement income strategy.