In a financial emergency? You may be able to tap into your 401(k) plan assets in the form of a loan. Here are a few basics that you need to know about 401(k) loans:401(k) Loan Basics:
- You can borrow up to $50,000 or 50 percent of the amount you have vested in the plan
- 401(k) loans have a 5 year term
- Most 401(k) plans require you to repay your loan through payroll deductions
Pros:
- The interest you pay is paid into your 401(k)
- You don't have to explain why you need the funds
Cons:
- The money you withdraw will not grow if it's not invested
- You repay the loan with after-tax dollars that will be taxed again at the time you withdraw
Read more: http://www.nasdaq.com/article/what-you-need-to-know-about-401k-loans-cm701350#ixzz4On36MbnW |
