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4 reasons you must never, ever simply take a 401(k) loan

Posted by: funnytodd   
March 7th,
2020

If you have a pressing financial concern and money in to your 401(k), you might be tempted to just take the money down by firmly taking a 401(k) loan. In the end, the income is simply sitting here, you would be repaying interest to your self you may have plenty of time to put the money back before retirement if you took out the cash, and.

You should resist the urge and leave your 401(k) cash right where it is while it can theoretically seem like a smart financial move to use that money to pay off high-interest debt, put down a down payment on a house, or fulfill another immediate need. The funds currently includes a work — assisting you to pay for food, housing, and medicine when you are too old to the office — therefore the only explanation you really need to ever remove it is for a real life-and-death emergency.

Listed below are four big main reasons why you ought to keep the funds in your 401(k) alone and that means you don’t have major regrets later on.

1. It back, you get hit with a big tax bill if you can’t pay

You typically must make payments at least once per quarter and must have the entire loan repaid within five years, although there are exceptions such as a longer repayment period if the money you borrow is used as a down payment for a primary home when you take a 401(k) loan. Read the rest of this entry »