Why this is correct (Q14 — disability as a common exception): Plan rules and tax codes typically define a set of narrow exceptions to the general early-withdrawal penalty designed to discourage pre-retirement distributions. One of the more commonly recognized exceptions is total and permanent disability: when a participant becomes disabled under qualifying definitions, withdrawals related to that disability may avoid the standard early-withdrawal penalty (though ordinary income tax may still apply to pre-tax amounts). Other exceptions exist (medical expenses exceeding thresholds, certain distributions after separation from service, etc.), but routine consumer expenses (vacations, cars, groceries) are not exceptions. The policy reason is straightforward: the penalty is intended to protect retirement savings, while exceptions recognize life events that create genuine, significant financial need or impossibility to continue working.

Practical takeaway & what to check: If you think an exception might apply, don’t assume — check plan documents and authoritative guidance. The definition of “disability” and the documentation required to qualify vary; plans and tax rules can have distinct tests and evidence requirements. If you qualify, work with the plan administrator to follow the required steps and provide documentation. For most people, the safer course is to build emergency savings to reduce the likelihood of needing an exception. If you face a serious life event, consult plan details and, if appropriate, a tax or benefits professional so you understand both penalty and ordinary-tax consequences before taking action.