Comments on: Should I Borrow From My 401k Plan?

By: What Are the Advantages of Investing In A 401k? - Amateur Asset Allocator

What Are the Advantages of Investing In A 401k? - Amateur Asset Allocator — Sat, 23 Jan 2010 16:59:01 +0000

[...] withdrawal exceptions you can use to get at your money penalty-free (you may also qualify for a 401k loan, not recommended). If you end up leaving or losing your job for whatever reason, you have several [...]

By: Peter C Krieger

Peter C Krieger — Sat, 02 Jan 2010 07:47:52 +0000

Does anyone ever consider using a 401K loan to make an deductible (or non-deductible) IRA contribution?
Here’s an example: You have a $10,000 balance in your 401K plan, and $6,000 balance in a deductible IRA.
Your total retirement savings @ this point is $16,000.00
If you take a $5,000.00 loan from the 401K plan, and use that to make a deductible IRA contribution.
Your 401K is now $5,000.00 but your IRA is now $11,000.00 leaving you with $16,000.00 of retirement assets.
You (hopefully) get a tax deduction you otherwise would not have had; you have more choice over where to invest the cash; and if you can still keep up the 401K contributions as you pay down the loan, your balance increases that much more quickly.
Any comments on this?

By: David

David — Mon, 20 Jul 2009 12:57:25 +0000

I would be interested in hearing some opinions on my situation. I am going to school at night, I work full-time during the day, and I am in a deep financial mess. I have a 401K plan that I have now had for 20 years. I was considering taking out a loan. My salary dropped almost $10,000 last year. The recent recession has hurt me more than I thought, and I already have an equity loan that I am paying on. My daughter is starting her second year at college and there are supplies(computer, etc) that I am trying to get. I have back taxes that I need to pay and on top of that is my mortgage and other bills. I have been creative in the way I stay afloat these days, but I see myself sinking in the near future if I dont try something soon. Would using a credit card(with 9.9% interest) be a better solution to paying some bills as opposed to taking a loan from my 401k?

By: Nick

Nick — Sat, 16 May 2009 06:30:10 +0000

For the people who say investing in a 401k is a bad investment you could be right or wrong but only in one manner… What is the company match? For people who think the free money thing is a scam they are incorrect. If you put 100 dollars in a bank for a year and earn 5 percent interest ( and no one will earn that in a bank account) you will earn 5 dollars. If you contribute 100 dollars to your 401k and you company matches 100 percent you now have 200 without even considering the investment.. That’s a 100 percent return… Even if you were insanely aggressive and went all stocks even a market like 2008 you would have maybe a 40 percent loss.. You are still ahead of just putting it in the bank… And if you were smart you spread it out and lost less then 40 percent so make out even better… and if you were ultra conservative and had it all in a stable fund you have above 200 dollars.. there is really no way if you get match you can beat the ease of gaining free money.

By: Borrowing Against Your IRA

Borrowing Against Your IRA — Wed, 17 Dec 2008 22:38:08 +0000

[...] Moolanomy: Should I Borrow Against my 401k [...]

By: Five Essential 401k Tips

Five Essential 401k Tips — Sun, 14 Dec 2008 23:32:17 +0000

[...] Moolanomy: Should I borrow from my 401k [...]

By: Fred @ Smart Savings

Fred @ Smart Savings — Sun, 15 Jun 2008 17:03:42 +0000

I don’t want the government to say that you can’t withdrawal money from your 401(k), but it rarely is a good choice. There are so many better ways to get a quick loan.

By: Sunday Morning Link Love | I've Paid For This Twice Already...

Sunday Morning Link Love | I've Paid For This Twice Already... — Sun, 15 Jun 2008 13:15:17 +0000

[...] Moolanomy: Should I Borrow From My 401K Plan? [...]

By: Clint @ Accumulating Money

Clint @ Accumulating Money — Sat, 14 Jun 2008 18:53:12 +0000

Your 401k is not always the best place to put your money. If you could instead save that money and use it to start a business you have the potential for much higher returns. However, most people wont realistically do that, and for them the 401k is one of the better places to be putting your money. And, as you advised, if you’ve already been putting you money in your 401k, it’s usually a bad idea to borrow from it.

By: Lazy Man

Lazy Man — Thu, 12 Jun 2008 13:33:49 +0000

This would be one case where I’d look at Prosper.com