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 checks nor does it affect credit rating.
–If the loan is short-term loan and paid back on schedule, it usually will have little impact on retirement savings progress. In some cases, it can have a positive impact.
–Borrowers avoid any investment losses on this money. A loan can be neutral, or even positive, in sideways or down markets. If the interest paid in exceeds any lost investment earnings, taking a 401(k) loan actually can increase retirement progress.
–Receiving a loan is not a taxable event unless the loan limits and repayment rules are violated.
–Many 401(k)s allow loan requests to be made through a website with the amount received in a few days with total privacy.
–Some plans now offer a debit card through which multiple loans can be made instantly in small amounts.
–Most 401(k) loans can be repaid faster than the loan schedule with no prepayment penalty.
— Most plans allow loan repayments to be made through payroll deductions (using after-tax dollars).