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    Theresa Robinson's Avatar
    Theresa Robinson Posts: 2, Reputation: 1
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    #1

    May 31, 2005, 12:06 PM
    Borrowing from 401K
    I need to borrow $2000.00 from my 401K. My husband lost his job & my paycheck doesn't cover all the bills & rent. I don't have any other resources from which to borrow money. What are the risks? I have tried to research this on the internet, but I am not financially savvy. I don't understand all the possible pitfalls. Is the amount worth the risks?
    Kyler2776's Avatar
    Kyler2776 Posts: 6, Reputation: 1
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    #2

    Jun 9, 2005, 12:19 PM
    Some help?
    I know that different 401k plans have different rules on how someone can take out money. My work will not let me take money out of my 401k unless I no longer work for them. Assuming that you can take money out of your 401k, there is a 10% penalty hit automatically if you are under the age of 59 1/2 (for most 401ks). Then you will have to claim that money as income and then get taxed again at tax time. This is because the money put into 401k are tax deferred.
    I would look into possibly getting a loan against your 401k to help you out. Again, most 401k plans will make you fit certain criteria to allow you to take out a loan. Generally the loan can be up 50% of your current vested balance. You will have to make payments on it at a certain interest rate, but fear not.. . the interest will go back into your vested balance as you pay it off. I hope this helps.
    Theresa Robinson's Avatar
    Theresa Robinson Posts: 2, Reputation: 1
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    #3

    Jun 9, 2005, 01:24 PM
    Thank you for the information. You have helped me a lot. I hope one day I can return the favor.
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