How to withdraw funds from 401K before age 59 12?

Without paying the 10% early withdrawal penalty Once you choose to start this distribution method you will have to make sure and follow the rules for the period of time that is required or you will be subject to the 10% early withdrawal penalty on all of the taxable distribution amounts for not meeting the time period rules.
All of the taxable distribution amount that you receive each year will be added to all of your other gross worldwide income and taxed at your marginal tax rate.
Distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies. For more information about the treatment of retirement plan distributions go to the IRS gov web site and use the search box for Publication 575, Pension and Annuity Income.
One of the exception rules to the 10% early withdrawal penalty is enclosed below and you can also find the other information in the referenced Publication.
Tax on Early Distributions
General exceptions
The tax does not apply to distributions that are:
Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service). See substantially equal periodic payments, later.
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