Should You Borrow From Your 401(k) Account?

If you have a 401(k) account, it can be very tempting to borrow from your account especially when your balance is very high and a loan could easily pay off existing debt, fund a home purchase, or pay for college tuition. Before you make the decision to borrow money, there are several things you must keep in mind to avoid risking your funds.

Borrowing from a 401(k) can seem like a risk free loan, especially since you repay yourself with interest. However, there are costs involved that are not readily apparent to the borrower who elects to take out a loan:

1. On the borrowed funds, you lose all tax-favored investment returns. In other words, you are effectively charged extra interest for the loaned funds.

2. Any interest you pay, even though you are paying yourself, is not deductible, but will be taxable to you when the plan pays you back via future distributions.

3. You may have to pay a fee to take out the loan. Add this expense to the loan costs to see if a loan is still cost effective.

4. If you leave your place of employment before paying off your loan, you will be required to pay the loan back in its entirety immediately. If you do not have the funds available to pay back the loan right away, you will then be subject to IRS taxes and penalties which can eat up as much as 30% or more of your borrowed funds depending on your tax bracket. The IRS treats all loans that are not paid back as disbursements.

Yes, a 401(k) loan can help fund life's emergencies, but the hidden costs and fees involved as well as potential taxes and penalties can quickly turn a good thing into a bad move.

Matthew Keegan is the owner of a successful article writing, web design, and marketing business based in North Carolina, USA. He manages several sites including the Corporate Flight Attendant Community and the Aviation Employment Board. Please visit The Article Writer to review selections from his portfolio.

In The News:

Three personal finance myths busted  LivemintMUMBAI: How many times have you been told that if an item is more expensive, it is of better quality and will last longer? While this may stand true in case of ...
Personal Finance Management For A Father At Different Stages Of Life  Outlook IndiaI am a father of two wonderful and sweet children. My daughter is 16 years old and son is 8 years old. Even with this, I don't think I have an authority to provide ...
Father's Day: Help your parent go digital, financially  LivemintMake sure you warn your dad about phishing apps and tell him how not to expose financial data to fraudsters.This Father's Day, here's how you can help your ...
Suze Orman and the Scam of the Personal Finance Industry  GQSuze Orman's rant against coffee is the latest in cable-news advice that puts the blame for an increasingly unequal financial system on individuals.
Conservative leadership hopefuls: personal finance pledges  Financial TimesCutting tax rates for the wealthy, abolishing VAT and slashing interest rates on student loans are among the personal finance pledges made by Conservative ...
PERSONAL FINANCE: Too busy to prioritize your finances?  The MercuryWe're busier than ever these days. Constant notifications, work travel, kids' activities and other important tasks are often competing for our immediate attention.
Weekend catchup — this week’s personal finance headlines  Financial TimesTV licence curbs, regional wealth divide, jobs market resilient.
Fintech startups like Goalwise, Wizely look to digitize personal finance management for consumers  ETtech.comA clutch of startups is trying to use technology to digitise the entire personal financial management for consumers, challenging established fintech entities that ...
Queries on personal finance and investing answered  The HinduQ. I have an 11-year old son. I wish to know if there are schemes for young boys like Sukanya Samriddhi for girl children. Do we have any good savings options?
Six personal-finance hacks that aren’t easy but promise a big payoff  MarketWatchCollaborative Fund's Morgan Housel on how to move the needle when it comes to your money.
What You Can Learn About Personal Finance From the Real Housewives  LifehackerThere are two reasons why anyone watches The Real Housewives franchises: The money and the drama.
Viewpoint | 4 reasons why women must take charge of their financial planning  Moneycontrol.comPrathiba Girish. It is truly wonderful to see so many women taking charge of their financial lives. The number of women who contribute to the household finances ...
Many Americans say their financial situation is worse since the Great Recession  CNBCThe Great Recession ended a decade ago. Many Americans have not seen their financial situation improve since.
Personal Finance Queries For The Day (03-06-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
4 personal finance rules to be financially independent  Dalal Street Investment JournalEveryone dreams about getting financial independence but there are certain things which people usually don't follow and just run behind a dream and take too ...
Personal finance apps for your smartphone  MoneyWeekPersonal finance apps for your smartphone can be a very useful tool for tracking your expenditure.
Opinion | Father's Day: 5 things that can make your financial journey smoother  LivemintThe key is to build the right financial habits and stick with them through thick and thin.
Want to Become Wealthy? Do This One Thing.  Helena Independent RecordMost of us would love to be rich, but achieving meaningful wealth generally takes significant effort. Yes, you might get there with a very lucky lottery ticket, but ...
PERSONAL FINANCE: Five simple tips to maintain positive cash flow in your new business  Statesville Record & LandmarkWhen it comes to finances, the difference between success and failure is often the ability to maintain a positive cash flow. We have this goal in our everyday ...
Father's Day: How single fathers can strike a balance  LivemintTaking care of a child, emotionally and financially, can be taxing.While juggling between the roles of a mother and a father, gaining control over your emotions ...
4 Common Personal Finance Tips That Will Actually Fail You  Yahoo FinanceFollowing these four tips could hurt your financial future. Find out why.
Personal Finance Queries For The Day (27-05-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
How to invest in Indian markets, if you are NRI?  Zee BusinessAn NRI is a Non Resident of India, who spends most of the days in a year outside India. If you are an NRI but wants to invest money in Indian investment options, ...
Buddhism And Personal Finance  Outlook IndiaHere is how one can manage their personal finance and attain financial nirvana through the teachings of the Buddha.
3 Personal Finance Tips You Should Ignore  The Motley FoolIf your mom ever told you to avoid swimming after eating because the cramps it would cause would surely result in your drowning, you've probably known for a ...
Even Harvard Is Now Teaching Personal Finance  The Wall Street JournalAdd this to the Ivy League curricula: basic financial life skills. Elite universities haven't typically focused on personal finance. That is starting to change, thanks in ...
Father's Day: Dad, don’t throw a money googly  LivemintFour tips to set you, as a father, on the right path when it comes to kids and finances.You are not doing enough if you are saving but not investing wisely... if it's ...
4 Social Security Myths That Need to Die | Smart Change: Personal Finance  Helena Independent RecordSocial Security provides a welcome stream of guaranteed revenue in retirement, but you could be in for a rude awakening if you don't understand how the ...
Father Knows Best: Lincoln Financial Study Finds Dads Have a Better Understanding of Personal Finance Than the General Population  Business WireIn honor of Father's Day, a few of Lincoln Financial Group's own dads share the personal finance advice they give their own kids.
Father's Day: Family's eldest member, typically the father, heads HUF  LivemintUnder Section 2(31) of the Income-tax Act, 1961, an HUF is considered a 'person' and, therefore, is treated as a separate entity for the purpose of tax ...
Personal Finance Queries For The Day (20-05-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
Tips from a private equity analyst turned personal finance guru  Financial NewsAs a City banker who started out at a top Wall Street firm, the ill-fated Lehman Brothers, Emilie Bellet might seem an unlikely candidate to need help with her own ...
Muthoot Finance to expand personal loan operations  LivemintKerala-based Muthoot Finance Ltd plans to expand personal loan operations taking the tally to 50 locations across the country by the end of the year, the gold ...
10 Top Personal Finance Books by Black Authors  Black EnterpriseIn the midst of the well-known personal finance books, here are the top 10 personal finance books by black authors you should add to your reading list.
PERSONAL FINANCE MANAGEMENT STRATEGIES  San Francisco ExaminerWe all know the feeling that comes along with owning money, good money. It's probably your payday, or business is booming. A smile is forming on your happy ...
Global Personal Finance & Budgeting Software 2019 Market Share, Trends, Segmentation and Forecast to 2025  Market ReporterMarketResearchNest.com adds “Global Personal Finance & Budgeting Software Market Size, Status and Forecast 2019-2025”new report to its research ...
Roulette, Milken and Personal Finance at Harvard  Bloomberg... • The investor who turned down Uber at a $5m valuation (Financial Times) • Getting Rich Investing in Art Is So Easy (Bloomberg) • The professor who beat the ...
Personal finance website ranks Arizona No. 14 for a fun visit  KTAR.comPersonal finance website WalletHub ranked Arizona as the No. 14 most fun state to visit in the U.S. Arizona neighbor California was first.
Budget 2019: Follow these simple steps to reduce your taxable income under new rules  India TodayNot even a month is left for the announcement of full Budget 2019 and the government is all set to make effective new income tax laws that will benefit millions of ...
ADIB launches digital personal finance service via mobile app  Islamic Business & FinanceThe lender's express finance *service* allows pre-qualified UAE Nationals to receive financing of up to AED 250000 while expats can obtain up to AED 100000.
Why you should buy home insurance, Personal Finance News, Business News  Zee BusinessMerely locking the house from outside, doesn't always help secure things that are inside. A financial product like Home Insurance can help in that case. It not just ...
Emerging Trends in General Insurance - India 2019  Zee NewsA strong growth has been seen in India's non-life insurance segment over the last few years. The market share of private companies is also increasing, reaching ...
Always a Bridesmaid? It's Going to Cost You  Journal TimesIt's an honor to serve as a bridesmaid or maid of honor in someone's wedding. That honor, however, generally comes with major expenses and a fair amount of ...
Defrauded while transferring money using UPI apps such as BHIM, Google Pay or PhonePe? Here is what you should do next  MoneycontrolAmit Sanghvi, a 25-year-old from Mumbai, was cheated of Rs 20,000 while using a Unified Payments Interface (UPI) application. He had called a fake helpline ...
Couples can keep their money separate and still share goals  LivemintBeing transparent about money matters and viewing finances as a couple can help smoothen the ride.A joint account allows spouses to access pooled funds for ...
Father's Day: Are you financially ready to be a dad?  LivemintHaving inadequate emergency fund or insurance , or not investing for your child's future can spell disaster for your little one..Take a quiz to find out if you are ...
Personal Finance Show: What to learn from Woodford, and innovative rewards and risks  Investors ChronicleCould investors have predicted that LF Woodford Equity Income Fund would stop trading?
SIP share: Tube investments becoming popular among mutual fund investors  Zee BusinessTube Investments is fast catching eyeballs of the mutual funds asset managers as the cycle and metal sheet making company has gained mutual fund house ...
Money lessons from Game of Thrones  Moneycontrol.comPay your debts like the Lannisters, and other money tips from Game of Thrones.
Global Personal Financial Management Tool Market 2019 – BridgeTrack, FinanceWorks, Intuit, Geezeo, Mint, MoneyDesktop, SapientNitro, Strands Finance  Market News MagazineGlobal Personal Financial Management Tool Market Research Report 2019-2025 by Market Research trade presents conceptual study and strategic analysis on ...
Buying new cars is bad personal finance, but I’m OK with that  The Globe and MailNew cars are a big, honking waste of money. That's personal-finance-101 stuff. I figure that my wife and I have bought eight new vehicles since we were married ...
Claer Barrett wins Personal Finance Journalist of the Year at Wincott Awards  Financial TimesFT Money editor commended for 'impressive range of work'
How to make credit score work for you  LivemintIf used carefully, borrowing can be a healthy habit to build a good credit score. But you need to pay on time.In later stages of your life when you apply for bigger ...
LIC New Jeevan Anand Plan: Check benefits and other details  Zee BusinessOne of the largest insurance companies in India, Life Insurance Corporation of India or LIC, gives several offers of term and endowment insurance products as ...
Investment alert! Goalwise forays into direct mutual funds  Zee BusinessGoalwise becomes the only investment advisory platform in India to offer commission-free, goal-based investing in direct mutual funds. Get more Personal ...
PPF account with SBI? Know eligibility, interest rates and more  Zee BusinessPPF is the most preferred mode of investment as it remains unaffected by existing market volatility. Get more Personal Finance News and Business News on Zee ...
How AI is catching cheaters and the filthy mistake you’re likely making in the kitchen  MarketWatchPersonal Finance. The filthy mistake you're likely making in the kitchen — and its simple $14 solution. Wood, bamboo or plastic? We show you the best cutting ...
Recent Grads Give Themselves A 'C Minus' In Personal Finance  Insurance News NetA new survey uncovers a variety of topics, including financial habits and behaviors, and how consumers grade themselves on their knowledge of personal ...
Domestic tips for business: how to deploy personal finance skills to running a company  The GuardianFrom finding cheaper utility bills to taking advantage of government tax breaks, why do so many business owners ignore basic money-saving wins so often ...
LIC policy holder? Take these precautions to avoid fraud  Zee BusinessIn the LIC advisory, tips to prevent fraud are given to those who have taken the LIC policy. Get more Personal Finance News and Business News on Zee ...
Paytm gets PFRDA approval: Now, invest in NPS through app  Zee BusinessPaytm today is one of the largest online platform for mutual fund investments in India Get more Personal Finance News and Business News on Zee Business.
Here's where Americans are vacationing this summer -- and what they're spending  CNBCJust about half of Americans are hitting the road — literally or figuratively — in the next three months. Where are we headed and how will we get there? For the ...
The 5 personal finance lessons $50,000+ of debt taught me  LaddersWithout this debt, who knows If I would be so enamored with finances today or where my path would have gone. Shutterstock. Having over $50,000 in total debt ...
High-Tax States Face an IRS Smackdown | Smart Change: Personal Finance  Sioux City JournalFinal regulations confirm what federal tax officials first suggested doing last year.
Health Insurance: IDBI Bank ties up with Max Bupa  Zee BusinessA Bancassurance corporate agency agreement was signed between IDBI Bank Ltd. and Max Bupa, a Standalone Health Insurer (SAHI) on June 1 2019.
Five ways to protect yourself from fraud on UPI apps such as Google Pay, PhonePe  Moneycontrol.comMaya Venkat, a 28-year-old Bengaluru-based yoga trainer, saved herself from a fraudulent transaction of Rs 14,000 while using the Unified Payments Interface ...
4 money management hacks for single Indian women  The Financial ExpressUnmarried women may have completely different needs as compared to divorced women or widows, though all of them are single technically.
PERSONAL FINANCE: Financial dos and don'ts if you plan to have kids later in life  The MercuryMany couples are choosing to start families later in life compared to their parents and grandparents. According to the National Center for Health Statistics, the ...
Kiplinger's Personal Finance: Safeguard your plastic  Richmond.comThe U.S. transition to credit and debit cards equipped with microchips — and payment terminals that accept chip transactions — is reducing fraud on existing ...
7 Father's Day Gift Ideas Under $50 | Smart Change: Personal Finance | helenair.com  Helena Independent RecordShopping for the fathers and father figures in our lives seems to get more challenging, and expensive, every year. This year, shoppers are expected to spend ...
Viewpoint | Is your financial adviser's opinion aligned to your money goals?  MoneycontrolUnbiased guidance that is purely in our best interest cannot be had in the 'free' advice model.
8 Best Apps for Buying and Selling Used Stuff  U.S News & World Report MoneyThough side hustles are a great way to supplement your income, you can begin boosting your cash flow by simply looking around your home for items you no ...
Investing.com Names Or Kapelinsky as Head of Personal Finance  Finance MagnatesInvesting.com has appointed Or Kapelinsky as the General Manager of its personal finance platform - Investing Money, which is now being rolled out.
RBI forms panel to review ATM Interchange Fee Structure  Zee BusinessIn a bid to give a fillip to the ATM deployment in the unbanked areas, the Reserve Bank of India (RBI) has formed a committee to review the ATM interchange fee ...
Personal Finance column: My personal journey of financial creativity  Glenwood Springs Post IndependentLast September, we welcomed our first grandchild, Zaylee Jean, into the world. She is, of course, perfect in every way. I now understand the excitement from ...
SBI’s repo rate-linked home loan decoded  LivemintTo be eligible to take a repo rate-linked home loan, you need to have a minimum annual income of ₹6 lakh.The total loan tenor cannot exceed 35 years.
Six students score sweet scholarships from MAX, a personal finance program  National JuristAnnual tuition at The University of Michigan Law School is $59,344. Now remember: Law school is three years ... But Brianna Potter can put a big dent into that ...
Financial Advisor Kalpesh Ashar shares personal finance tips for fathers | The Money Show  Times NowOn The Money Show, Fathers day is on 16 June and the day is dedicated to all the unsung heroes who are quietly doing their work, fulfilling their responsibilities ...
Mutual Funds SIP: Ways to maximise your investment returns  Zee BusinessIn mutual funds SIP, experts advise near 30 per cent of the portfolio for investing in more than 10 years as returns in SIP becomes visible only after 4-5 years.
Financial planning for young adults - Sanlam  Independent OnlineFor some of us, the thought of coming up with a financial plan is somewhat like going to the dentist: we delay for as long as we can.
Viewpoint | How your advisor’s personal biases can impact your investments  Moneycontrol.comAn advisor with a bias towards long term financial planning would be better as he/she would work with you on your financial goals.
6.5.19 Charter school offers incredible personal finance course; Wells Fargo shady brokers; Exercise  ActionNewsJax.comThere's a charter school in a poor Philadelphia neighborhood that is changing the way personal finance is taught to youngsters; Wells Fargo employs a much ...
Ask a Fool: Am I Diversified Enough? | Smart Change: Personal Finance  Journal TimesLack of diversification isn't necessarily bad, if it's for the right reasons.
Mutual Funds: Why diversification matters - What investors should know  Zee BusinessMutual funds expert say diversification means putting your surplus money in all categories i.e. small-cap, mid-cap and large-cap mutual fund schemes. Get more ...
Personal Finance Daily: Why more people aren't buying homes as mortgage rates drop and Facebook wants to pay you for your data  ForexTV.comRisk Disclaimer - By using this web site you agree to its terms and conditions. All materials, including but not limited to articles, directories, photos, lists, etc., on ...
Lost your SBI credit card? Here`s step-by-step guide to get a new one  Zee BusinessOne can place the request for the re-issue of the credit card through, official website i.e. sbicard.com, Mobile app, write an official mail at sbicard.com/email or ...
If You Fall for These 2 Retirement Myths, You’re Likely to Struggle During Your Golden Years  The Motley FoolThe internet is loaded with tons of useful information about planning for retirement. Unfortunately, it's also loaded with misinformation that could hurt you.
HDFC Bank credit cards: From charges to benefits, know everything  Zee BusinessCredit cards not only help you pay for your shopping or purchases, they also offer many discounts and deals. HDFC Bank has various types of credit cards for its ...
Travel insurance: Do you know these benefits?  Zee BusinessAmong many advantages, travel insurance can be opted at an affordable price and still offer hefty cover. Get more Personal Finance News and Business News ...
Opinion | Planning higher education for your little one  LivemintLike most other goals, a high quality education goal(s) can be achieved, with the right planning, discipline and execution.
Salaried employee? Five things you should know about Income Tax  Zee BusinessIncome Tax Return for FY 2019-20: The deadline for filing Income Tax Return (ITR) is approaching fast. If you are a salaried employee, you would have to file the ...
Public Provident Fund: 5 facts you must know about PPF  Zee BusinessPublic Provident Fund or PPF was introduced to mobilise small savings. The scheme offers a long-term investment option, decent returns coupled with income ...
How debt related investments are taxed  Zee BusinessThey are various kinds of debt-related instruments available in the market like, Fixed deposits, National Savings Certificate, Post office schemes, Senior Citizen's ...
OPINION: The world is moving ahead in financial education  Independent OnlineWORDS ON WEALTH: People need to become better educated about money - for their benefit, but also for the benefit of the economy.
Post Office Time Deposit: Interest rate, tax benefits explained  Zee BusinessPost Office Time Deposit (also, often called as Fixed Deposit) is one of the easiest options for saving money and earning interest rate up to 7.8 per cent.
Personal finance expert outlines the surprising things you can claim as tax deductions  Daily MailWith the end of financial year just weeks away, a personal finance expert has outlined the surprising things that can be claimed as tax deductions - including ...
SBI loan against shares: Rules, interest rates and benefits explained  Zee BusinessLoan against securities is a loan where you pledge your shares, Mutual Funds or Life Insurance policies as collateral to the bank, which is against your loan ...
Pensioners could have to work an extra ten years, millions are warned  ExpressMILLIONS of British retirees could run out of money a decade before they die, economists have warned.
Inheritance tax loophole: Top tips on how to legally avoid paying inheritance tax  ExpressA finance expert has revealed how to limit your inheritance tax liability and ensure your estate is below the current threshold. Duncan Simpson, Research ...
PERSONAL FINANCE: Once you turn 70½ this tax requirement may apply to you  The MercuryIf your retirement plan includes tax-advantaged accounts, there is a particular tax rule you should know about: required minimum distributions, or RMDs. This tax ...

What?s New in Checking ? From Designs to Photos

Just about everyone has a checking account. Checks present easy... Read More

Budgets And Eating - Can They Co-Exist?

Whatever your reason for having a tight budget, the truth... Read More

The Benefits of Banking Online

How many drawers did you have to look through to... Read More

Planning Your Financial Future

Millions of people give a lot of thought to financial... Read More

10 Steps To Improve Your Financial Situation

Here are ten steps you can follow to help improve... Read More

Money Saving Tips. Maximize Savings on Everyday Items!

Frugal living is more than a lifestyle. It's a passion.... Read More

Personal Loans For Homeowners ? One Of The Numerous Rewards For Being A Homeowner

You no longer look at the pictures of homes cause... Read More

Financial Security

1) HOW TO LOOK FOR A JOBA) The Chronological Curriculum:1.... Read More

Save On Food - Ten Tips

To save on food, be an opportunist. Buy what you... Read More

Debt Management ? More Ways to Save on Gas Consumption

The price of gas continues to climb, and with continued... Read More

How You Feel Affects How You Shop & How Much You Spend

Have you ever stopped to think about how your "mood"... Read More

Single Mother and Learning how to Save

Saving may seem easier if you were saving for a... Read More

What Happens if You Die Without Making a Will

If you die without making a Will in the UK,... Read More

Credit Card Debt ? Watch Your Credit Report and Your Bill

Most consumers are aware of the importance of their credit... Read More

If I Had a Structured Settlement, I Would Use It to Pay for Gas

Has anyone been to the gas pumps lately? Soon $3... Read More

Top 10+ Ways to Jumpstart your New Year?s Finances!

Of course, these don't have to be done in any... Read More

How to Save Money in a Grocery Store

Now there are ways to save money in the grocery... Read More

First Checking Account ? When is it Time?

We all know that money doesn't grow on trees, but... Read More

What is a Traditional IRA?

With a traditional Investment Retirement Account (IRA) you pay taxes... Read More

Creating A Household Budget

Creating a budget can be a very difficult task. Although... Read More

Understanding and Controlling Your Finances

Have you ever wondered what it would be like to... Read More

Kundalini Lessons - Money

I've been going through and interesting growth period lately that... Read More

A Fresh Start for Family Finances in 2005

While 40% to 50% of us make New Year's resolutions... Read More

The Joys of Address Labels

Address labels are many things to many different people. If... Read More

Saving Dimes Can Go a Long Way

On the other hand, there are those people who are... Read More