401(k) Loans
As the economy has slowed recently, more and more people are taking loans from their 401(k)s. While we generally believe that you should avoid taking a loan from your 401(k) we understand that there are times when it makes financial sense. The main points of the article are summarized below and we have also included a link to the article on MSNBC.
Key Points
- You pay the loan back with Post-Tax dollars while the original contributions were Pre-Tax dollars.
- The maximum amount you can withdraw is $50,000 or 50% of your account value, whichever is less.
- If you leave your employer the loan immediately becomes due.
- If you fail to make the required payments or do not repay the loan in full when you leave your employer your loan will be considered to be in default. If this occurs you will have to pay a 10% early withdrawal penalty and income taxes on the defaulted amount.
http://www.msnbc.msn.com/id/23241606/
Please let us know if there are issues that you would like more information on or if you have a question about your account that you would like us to answer on the blog.
