Borrowing from 401(k) accounts remains steady, the report said, although fewer are using those accounts to purchase homes. However, "hardship withdrawals" on 401(k) accounts has risen more than 20 percent, some account administrators reported.

Many accept fees charged and taxes owed and simply cash out the accounts to avoid having to repay the amount they use.

Merrill Lynch (AMEX:BXA) reported a 23 percent rise in hardship withdrawals from a year ago and Principal Financial said it fielded 245 calls in January from account owners who wished to avoid foreclosure, up from 45 calls in January of 2007, the newspaper report said.

If she hadn't borrowed from her 401(k) account, "we would have been foreclosed on last year," Tamara Campbell, who lives near Denver, told USA Today.

Set up to secure money at retirement and guarantee income for administrators, the downsides to a 401(k) withdrawal can be steep. Eighty-five percent of employers bar contributions to 401(k) plans for six months after a hardship withdrawal, the report said. Taxes are also owed on withdrawals and penalties for early withdrawals also apply.