Is it Smart to Borrow Money Against a 401k? | eHow

1 Фев 2015 | Author: | No comments yet »
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Is it Smart to Borrow Money a 401k?


A 401k is a defined contribution retirement with significant tax advantages. invested in a 401k is contributed on a basis, and all taxes on investment interest or dividends are deferred money remains in the account. money withdrawn from a prior to age 59 1/2 is taxed as ordinary and subject to a 10 percent tax penalty.


Loans taken a 401k plan must be back with interest by the The repayments, including interest, go into the employee’s 401k Any money not repaid according the set forth by the plan document is a distribution, and is subject to taxes and any penalties. Federal law allows for a term up to five years, there is an exception for people their primary home.

Loan Pitfalls

While it may be to borrow against your there are some important to consider. First, the borrowed does not participate in market while it is being repaid. means that if you borrow and the market goes up 10 percent, you miss out on that $5,000 Although you are repaying the loan your account, you are doing so your own taxed dollars. many 401k plans participants to repay the full balance of any loan upon from service. This if you are laid off, you might to repay the entire loan when you can

least afford it.

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As your progresses, you may need to take from your 401k to unavoidable expenses. Your to purchase a.

If you need a loan, it appear that your is the best option because be borrowing your own money.

If you money for education costs or a payment on a home, you can borrow from either your

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While borrowing money your 401k should not be first choice, if you need to money and have few other.

In cases, you can borrow money your retirement account, on the type of account and the plan Specifically.

If you find yourself in of money for an emergency or for a home or home repair, you may find.

you need money during financial times, your plan may be one of the first places you for help.

There are different types of accounts that are available for whether you obtain an account the organization you work.

Your sits and grows as you keep it, Some times though we all to Borrow against it. Heres a.

The Revenue Service makes it difficult to take an early from your 401k limiting distributions to when

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