Borrowing from a 401(k) plan can make sense when cash is needed for a serious SHORT-TERM liquidity need.  “Short-term” is roughly a year or less.  “Serious liquidity need” does NOT include a sudden yearning for a flat-screen TV. The best…

Regulations require 401(k) plan loans to be repaid on an amortizing basis over not more than five years, unless the loan is used to purchase a primary residence. Longer payback periods are allowed for these particular loans. Evaluating the use…

Sometimes it may make sense to borrow from your 401(k) plan.  The upsides are: –401(k) loans can be a quick, simple, lowest-cost way to get cash needed. –In most 401(k) plans, requesting a loan requires no lengthy applications or credit…

The pitfalls of borrowing from a 401(k) plan are the following opportunity costs: –Borrowers lose any positive earnings that would have been produced by those investments in the market.  In other words, the impact is negative in strong ‘up’ markets.…

According to a study by the Employee Benefits Research Institute (EBRI), nearly 20% of all 401(k) participants had plan loans outstanding. This statistic has held true since the early 2000s.  These loans can be appropriate in some situations.  However, borrowing…