And cashing out your 401k while holding a Top Secret clearance sounds like a major red flag. If he did cash it out, I wonder if he stuck around to pay the tax penalties for doing so?
401k administrators are required to discount any 401k payout by an estimate of the amount of tax you would owe including the 10% penalty. So if you cashed out $100,000 you'd likely only received a check for about $60,000. The rest would go directly to the IRS and if that made you pay too much you could get your refund the following year.
The IRS always get paid.
he could also take a loan from his 401k
They don't allow you to loan out >50% of your 401k.