401K early withdrawl

It is true. You cannot take and close the account unless a distributable event occurs.
These are
Leaving employement.. (there may be a wait period after this, but it is usually immediate)
Attainment of retirement age (as defined by the plan, not always 59 1/2, and the plan does not have to allow withdrawals at this time.)
Or Permanent disability.
If any of these have occurred you can close.. if not you can't.
This is a common misconception that you can just close anytime and pay the tax and penalty. NOT so... once the funds are deposited into a retirment account they cannot be easily accessed.
Hardships and loans are the only options while still employed, and again these do not have to be allowed, and can be restricted to number of loans, and reason for loan... It is the employers plan and they choose the options.
It would be nice if when they encouraged employees to sign up for these plans, they educated them on the regulations that go along with them....