Should You Borrow From Your 401k?
Here are some of the point you should think about before you decide to use your 401k
Doesn’t affect your credit rating
Low interest l You pay yourself the interest
You won’t be charged the 10 percent early withdrawal penalties plus income taxes
You don’t have to qualify for the loan l No collateral needed
You forfeit accrued interest
The interest is not tax deductible
Some plans allow no contributions to the 401(k) during the loan l If you lose or quit your job, the loan is often due in full in 30-60 days
If you default on the loan, it is considered a withdrawal and you will owe a 10 percent penalty plus a hefty tax payment
As always, contact your tax adviser or certified public accountant to make sure the tax implications.