Getting loan from your 401k

Society Business and Career
1

Has any of you actually done that?

I got a lot of information off the web but haven’t found anyone who has actually done that. So, if you are one of those, please share your experience, suggestions, concerns etc.

2

Re: Getting loan from your 401k

Sorry I didn't do it. I did contemplate at one point, I don't know the downside unless you invest it in stocks and lose most of it. You pay interest to yourself :D, you don't pay taxes as you would have to if you were to withdraw portion or all of it. I am sure you knew all this but still felt like sharing it.

3

Re: Getting loan from your 401k

So I have amount X tied up somewhere for 2 months more than I would like to. In other words I need X now but it will come in 2 months later garenteed. I am sure banks will say sure we will lend you X but will charge you $Y.

And I just don't like banks.

4

Re: Getting loan from your 401k

I did in 2004. Since at the time the market was strong I was able to get a good amount from it. I have been paying around $13 a pay check so its not bad paying it back.

5

If your 401(k) is more than 2X then I am sure you can get the loan easily, not sure but your brokerage may charge some fee. I think in your case if X amount is guaranteed in 2 months then this probably is best way to go but then I don't know how long would it take for your 401(k) manager to release the "loan".

6

Re: Getting loan from your 401k

If you get laid off, then you have to pay the loan immedietly and pay fines as well..its a big risk