Comments on: Top 3 reasons not to borrow from a 401(k)

By: Mike

Mike — Fri, 31 Oct 2008 13:29:51 +0000

Any loan (a 401(k) loan, bank loan, etc.) will be repaid with after-tax dollars. And by paying the interest to your plan vs a bank, the employee saves a bit more. While I don’t recommend taking 401(k) loans, with the recent downward spiral of the market, these borrowers have protected their assets by having less money in the plan, thus not losing as much as the rest of us.

By: Martha

Martha — Thu, 21 Aug 2008 18:43:36 +0000

I have noticed an increase in 401k loan requests for the company I work for. I try to discourrage them from borrowing from their 401k, however, in these tough times and with the low salaries some of the employees receive, that is not always possible.

By: G Tabler

G Tabler — Thu, 31 Jul 2008 21:42:52 +0000

Your can disallow loans by stating as much in the plan document. I have done so in the past to stress that a 401(k) is a tool for retirement.

By: Finance

Finance — Thu, 31 Jul 2008 19:35:48 +0000

Although what you say about the money being taxed twice is somewhat true. The loan is a non-taxable distribution. So in the end the distribution in retirement will only be taxed once.