Money Girl The Ultimate Guide to Borrowing from Your 401(k)
Apr 23, 2025
Exploring the options of borrowing from 401(k) and 403(b) plans, this discussion reveals essential rules and potential pitfalls. Listeners learn about borrowing limits and the importance of informed financial choices. The pros and cons are debated, focusing on repayment terms and tax implications. Fun connections are made between financial planning and home improvement projects, emphasizing the impact of smart decisions on overall financial well-being.
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Check 401k Loan Eligibility
- Check if your workplace retirement plan allows loans before applying.
- You typically can borrow up to half your vested balance, max $50,000, and repay in five years.
Repayment Timeliness Is Crucial
- Repay your 401k loan on time to avoid income taxes and penalties.
- Leaving your job with an unpaid loan means the balance counts as early withdrawal.
401k Loans Offer Advantages
- Use 401k loans for quick access to money when you can repay on time.
- No credit check needed and usually lower interest compared to other debts.