Find out the financial benefits of tying the knot!


Thinking Of Borrowing From Your 401(k)? Read This First!

June 5th, 2017 | Written by


While it may be tempting to borrow from your retirement savings, in the end it may not be the best option.  Borrowing from your 401(k) today can impact your future and defeat the overall purpose of saving for retirement.  Before you withdraw from your 401(k), consider these three reasons why you should keep your hands off.

  1. Consider Tax Implications – Participating in a 401(k) lowers your taxable income. When you borrow from your 401(k) you must repay the loan with after-tax dollars. Also, unlike mortgage loan interest, the interest on the 401(k) loan is not tax deductible.
  2. Loss Of Opportunity – Borrowing from your 401(k) means you lose out on potential growth since it’s not invested in the market. You’re missing out on compounding earnings and tax-deferred growth.  This loss of time can never be recovered.  Also, some plans require you to pay back the loan before you’re able to contribute to your plan.
  3. If You Leave Your Job – If you are no longer working for your employer, you must repay your loan within 60 days. The amount of loan that is not paid back is considered a distribution and is subject to income tax and 10% early withdrawal penalty (if under the age of 59 ½).

Tapping into your retirement savings has its consequences.  Before you borrow against your 401(k) it’s important to explore all other options and consult with your financial advisor first.

Let's Keep The Conversation Going

Send a note.

Tags: , , ,

Building Relationships | Delivering Success®
The Prosperity Consulting Group registered as a Registered Investment Advisor (RIA) in 2005. We have with a passion for providing clients with objective investment advice and wealth management solutions. Our purpose, coupled with our fiduciary commitment, is essential in helping clients achieve their financial goals. Our firm is dedicated to providing unparalleled financial planning and investment advice to individuals, families, businesses and institutions. We have identified key areas that are critical and integral to a client’s financial success. These planning areas encompass: Investment Planning & Management Retirement Planning Estate Planning Tax Planning Business Planning Insurance Planning Income Protection & Asset Preservation Education Planning 401(k) Planning
10055 Red Run Boulevard, Suite 130
Owings Mills
United States