The vast majority of the time it's financially ruinous, but not necessarily always. Many companies match what you put into your 401k, so you're getting a 100% or maybe 80% return, and it can make financial sense to use that money to pay off large debts, because those matching company funds more than pay for the 10% penalty. It also helps if you have a high earning potential and can afford to save a higher amount away later to compensate for what you took out.

But if you are barely able to fill that account, you're basically fucked if you have to drain that account.

[–] Dimmer06@hexbear.net 7 points 5 days ago

Some Americans have employer pension funds you usually can't touch until a certain point (either age or years of service).

Much more common are 401(k) plans or 403(b) plans. These are tax advantaged accounts that are the sole property of whoever contributes to them. There are usually quite a few exceptions but if the money is pulled out it the worker has to pay income tax on it plus a ten percent penalty.