There are times when it is absolutely necessary to borrow from a 401(k) retirement plan. Viewpoints Industry shares the types of loans to take that won’t hurt you in the long run.
Keep in mind that some plans and some employers have set rules on taking a loan from a retirement plan. If you need to borrow money from the plan, it is best to know that you won’t lose your job soon and can pay it back within the timeline given. Payments are taken from your paycheck. That is something else to remember before taking money from a retirement plan. Always be sure to read all of the terms and conditions before signing on the line to borrow money from the plan.
If you find yourself out of work with a lot of credit card debt, consider borrowing from the plan to pay off the debt. But be sure there are enough funds in the plan to do this. If wanting the loan to buy a new car or home, traditional loans are better and the percentage rates are usually better.
The 401(k) loan is good for a short-term loan rather than a long-term loan. Viewpoints Industry suggests holding off from borrowing from a retirement plan if possible. The funds growing in the account will be needed when it is time to retire. With the economy still struggling to get on track and the job market looking iffy at best, save those funds for the future. Instead, go to a financial website like bankrate.com and see if there are any banks willing to compete to give you a better loan deal for your needs.