This is a similar question to the one we answered regarding taking out a 401K loan to pay off credit card debt, with a similar answer...Don't do it. You must resist the temptation to take a 401K loan out to pay for other expenses. In the state of the current economy it is very dangerous to borrow money from your 401K. Although the economy is improving, layoffs are still occurring. A layoff can happen at any time and if it does your loan will be treated as a withdrawal. You will have to pay income tax on the entire amount you borrowed and if you are under 59 1/2 you will have to pay a 10% early withdrawal on top of it. If you need money for college, federal student loans are your best bet.
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