So, you’ve found out that you can borrow from your 401k and you’re ready to call your company’s 401k manager and request the maximum amount. After all, it’s your money and you need it now. Your human resources page tells you it’s simple to request and you’re paying yourself back with interest so what’s the harm? Slow down. It’s not necessarily a bad thing to borrow from your 401k, depending on the reason you need the money. However, you need to know the 401k loan rules before you take out a loan, just as you would need to know the terms of any loan from any institution. Yes, you are paying yourself back, but in the meantime, the money … [Read more...]
Is Borrowing from 401k Funds Ever Okay?
“Never, ever, ever resort to borrowing from 401k funds. Ever.” If you have a 401k account through your employer, you have probably heard those words over and over again. Although the option for you to take out a loan on your 401k exists, most financial advisors will tell you that taking one out is a really bad idea. After all, you are trying to use your 401k funds to secure your financial future after you retire. Some people will even tell you that taking out a 401k loan is like stealing from yourself, since you won’t be earning anything on the money you have out. … [Read more...]
How to Borrow from 401k Funds in Case of a Financial Emergency
Sometimes, you don’t have any other choice. You are staring at a pile of bills on your counter, your house was flooded by recent rains and you don’t have flood insurance, your wife just fell and broke her leg and you have depleted all of your emergency savings that you were diligently socking away for just such an occasion. Suddenly, your eye falls on your 401k statement and suddenly you know you have to borrow from 401k funds that you haven’t even thought about since you started working for your current company. While most financial experts will advise against taking out a 401k loan, you might not have any options left. If you are facing … [Read more...]