Try to avoid taking out a 401K loan

Try to avoid taking out a 401K loan

RICHMOND, Va. (WWBT) - You’ve been putting money in that 401K account for a couple years now-- and it’s growing. It’s also tempting to raid it. Don’t!

Expert after expert tells us-- don’t take out a 401K loan unless it’s a real emergency. Many plans allow you to borrow the money and pay it back-- but Michael Joyce with the financial firm Agili says you are stealing from your future.

He also says something most people don’t consider-- is what happens when you take out a 401k loan-- and then you leave your employer. “Whether you wanted to or whether you got laid off, you have to pay back that loan right away or it’s going to be taxable income. And if your under age 59 ½ you’ll pay 10 percent penalty,” said Joyce.

So there are big negative consequences that maybe you can’t anticipate. He says-- borrow from relatives or get a loan before you take from your future. And if you have to take out a 401-k loan-- pay it back as soon as possible.

Copyright 2020 WWBT. All rights reserved.