The Future


Should I ever borrow from my 401(k)?

According to the IRS, some 401(k) plans allow participants to borrow from their plans, but this comes with quite a number of conditions, especially if the participant is below age 59½. The amount can be no more than $50,000; the loan must be repaid within a certain time frame (unless it is to purchase your primary residence); interest rates on the loan must be “reasonable”; loan payments must be made on a regular (at least quarterly) basis; you may be responsible for a 10% penalty; and you must report this loan as income. Please contact your tax adviser or the IRS for further guidance on 401(k) loans.


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