Here’s how to borrow from your 401(k) without ending up with a big tax bill.
Even your boss wants you to keep your hands off your retirement plan savings.You have an immediate emergency.
"Say that you need to meet the deductible on your high-deductible health-care plan, and you have no money in your health savings account," said Aaron Pottichen, president of retirement services at CLS Partners in Austin, Texas. He is referring to the tax-advantaged health savings account that individuals may use to cover qualified medical expenses. It's also known as an HSA.
You have an urgent cash need, but your credit precludes you from obtaining a competitive interest rate.You need to pay off high-interest debt that's hampering your long-term financial goals."If you're in 'pay down debt mode,' it's all about what's your cheapest interest rate and how fast can you get the debt down," said Pottichen.
from Aon Hewitt revealed that six in 10 employers have said they'd take steps to curtail the leakage of assets from retirement plans. Those actions include limiting the number of loans available or the amount of money that's eligible for borrowing."When you take a 401 loan, it comes out of payroll and reduces your take home pay," said Cox. "Either you follow the payment schedule or you fully remit the balance due.
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