By: Larry Gilmore

Larry Gilmore — Tue, 04 Jun 2013 03:27:59 +0000

Can I borrow against my retirement plan? With some plans, yes you can. But with this option the question becomes "should you"? Loan provisions would be most common with a 401(K) plan. While usually hardship related, the reasons have been reduced from hardship only status for some time. Trucks, cars, vacations were the norm for a while with retirement plans loans. The problem with pension loans is they take funds out of the investment pool. Sure you're paying yourslef back, but at 5%. What happens when those funds, left alone would have made 10%? Also if you leave employment for any reason, the loan balance is due immediately or it becomes a pre-mature distribution. So taxable income and a 10% penalty. Borrowing from your pension is a last resort only choice. Never a first choice.

By: Bob Vineyard

Bob Vineyard — Mon, 03 Jun 2013 23:13:02 +0000

Some retirement plans have the ability to make hardship loans, some don't. Be aware that when you borrow from your plan you are limiting the amount of money you will have when you retire. Even if you pay the money back (which you are required to do) the lost earnings on the borrowed funds have a compounding effect on your benefit.

New answer on: Can I Borrow Against My Retirement Plan?

By: Larry Gilmore

By: Bob Vineyard