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:

Personal finance rules that one should follow  Dalal Street Investment JournalPersonal finance rules are like advices for an individual. These rules will help you to gauge your personal finance situation. These rules are generalized but ...
5 Popular Personal Finance Thumb Rules You Should Know  Outlook IndiaThumb rules mean a simplified piece of advice regarding something. It is not strictly accurate for every situation. However it is something that is easily learnt, ...
700,000+ Women Live Richer Because Of This Former Teacher's Online Personal Finance Academy  ForbesIn 2009, Tiffany Aliche seemed to have her finances — and her life — together. She had purchased her first (used car) in cash at the age of 22, and she saved ...
Should I invest in mutual fund SIPs? Answers to your personal finance queries  The HinduMutual funds, even if you go in for debt funds, are market-linked products where there are no guaranteed returns like bank fixed deposits.
Where should I invest after retirement? Answers to your personal finance queries  The HinduRetiring earlyQ. I am 41 years old and married with an 8-year old child. I am planning to retire in the coming months. I have no liabilities and have taken medical ...
Easy personal finance tips that can dramatically cut your honeymoon costs  AsiaOneSingaporean weddings are increasingly expensive, which can potentially leave you and your partner with a smaller budget for the honeymoon. Fortunately ...
Shriram City Union Finance issues NCDs with interest rates up to 9.85%  LivemintAn issue of secured non-convertible debentures (NCDs) from Shriram City Union Finance will open on 21st August and close on 19th September, 2019.
Shriram City Union Finance NCD Opens; Should You Subscribe?  GoodreturnsShriram City Union Finances non-convertible debentures (NCD) for August 2019 opened its Tranche II on 21 August. Priced at Rs 1000 per NCD, it can fetch a ...
Personal Finance Queries For The Day (22-07-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
Zerocard 101 | Smart Change: Personal Finance | mtstandard.com  Montana StandardMoneyTipsYou prefer the simplicity and the spending limit security of a debit card, but you also like the cash-back rewards associated with credit cards. Zero ...
Money, personal finance, and navigating relationships  Vox.comConversations about navigating money in relationships.
Global Personal Finance Services Market 2019-2024 Growth Trends: Credit Karma, Harvest, Mint, LearnVest  Top News HeraldThe market research study titled Global Personal Finance Services Market 2019 by Product, Application, Manufacturer, Sales and Segmentation 2024 ...
Personal Finance: Five Biases To Shed When Investing  BloombergQuintBehavioural bias is not just a complex-sounding investment theory, but a concept that has intrigued researchers around the world. Its core is very simple – we ...
Personal Finance Queries For The Day (05-08-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
US Personal Finance Software Market 2019 – Indepth Analysis by Product, End-User, Key Players and Forecast to 2026  Business IntelligenceThe U.S. personal finance software market worth $343 million by 2026, registering a CAGR of 5% over the forecast period 2018-2025, owing to rise in need for ...
Health matters more than wealth in India: Report  Economic TimesFollowing a healthy lifestyle and forging a stronger bond with family take precedence over more materialistic goals.
Personal finance blogger Ramit Sethi urges people to buy what they love and drop what they don’t  Toronto StarSethi's new book encourages people to spend extravagantly on things that make them happy.
7 Worthwhile Online Personal Finance Courses  Yahoo Finance"Some things that you learn about in a personal finance course may not be applicable to you or may not be appropriate to implement in your own life," Feutz ...
Personal Finance Daily: This man was $70000 in debt — then one song changed everything, and 10 steps to take now to prepare for the next recession  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 ...
8 Things Newlyweds Need to Know About Personal Finance  Yahoo FinanceHere's a guide to help transition into sharing your financial life with someone else.Image source: Getty Images.
My favorite 4 books to get better with money have nothing to do with personal finance  INSIDERFor me, spending was an addiction that some color-coded budget spreadsheet couldn't supersede. I had to dig deeper.
Personal Finance Queries For The Day (29-07-2019)  Outlook IndiaPersonal finance queries responded by industry & subject-matter experts.
3 Habits That Sabotage Your Savings | Smart Change: Personal Finance  The MissoulianIf you're struggling to save for the future, you're not alone. One in five Americans has no savings at all, a survey from Northwestern Mutual found, and money is ...
Teaching your kids about personal finance in the age of digital money  ABC LocalTo parents who grew up in simpler times, the prospect of teaching teens and tweens how to manage money in a largely cashless world can seem daunting.
Learn the Basics of Investing & Personal Finance Without Breaking the Bank  InverseIf you're looking for a way to attain financial freedom, first you have to learn the basics. And thanks to the Pay What You Want: Personal Finance Bundle, learning ...
Stay Away From Lure Of Cashback While Buying Insurance  BloombergQuintIf you happen to select an insurance product that also combines investment with it, evaluate both the investment and insurance components separately.
How to Cut Your Largest Expense in Retirement  Journal TimesHousing is most retirees' largest expense, as it is for most working adults. The average household headed by an adult 65 or older spends nearly $50,000 per ...
Tennessee Army National Guard Donates Personal Finance Curriculum to Stewarts Creek High  WgnsradioThe Tennessee Army National Guard is donating Ramsey Solutions' Foundations in Personal Finance curriculum to Stewarts Creek High School. Foundations ...
PERSONAL FINANCE MANAGEMENT: How banks should use personalized services to increase customer satisfaction and  Business Insider IndiaThe ability to conduct banking activities via a sleek mobile app is no longer enough to satisfy consumers - it's table stakes.Banks need to focus on deploying.
Weekend catchup — this week’s personal finance headlines  Financial TimesOnline payments, pension fraud alert, energy bills to fall.
Pension WARNING: ‘Disengaged’ 38% of Britons face annual £12,000 pension shortfall  ExpressPENSION contributions may be made throughout ones life to a private pension, such as a personal pension or a workplace pension. However, new research ...
How This Fake Financial Expert Tricked Outlets Into Publishing Her Advice  HuffPost IndiaPatricia Russell seemed to appear out of nowhere. A certified financial planner and graduate of several prestigious colleges, Russell has recently been quoted ...
GUIDES: A pre-wedding financial checklist  Independent OnlineThe “business” of marriage seems unromantic, but the reality is that money is one of the biggest sources of conflict, writes Larry Masson.
5 Issues With the Social Security 2100 Act | Smart Change: Personal Finance  The MissoulianClick here to view this image from http://www.missoulian.com.
How I Bought a Home in Atlanta | Smart Change: Personal Finance  Twin Falls Times-NewsIn this series, NerdWallet interviews new homeowners across the country about their unique homebuying journeys and the financial decisions that helped them ...
19 ways to lower your electricity, water and cable bills, and teens will love this car — except it tells their parents if they speed or break curfew  MarketWatchHappy Tuesday, MarketWatchers. Don't miss these top stories: Personal Finance. My aunt is stealing my dead mother's Social Security and persuaded my ...
Experts` hope high from direct tax code  Zee NewsNew Delhi: With the direct tax code (DTC) being in the works for years and report of the task force expected anytime now, tax experts hope the new draft law ...
Even someone whose finances are a mess can teach you something valuable about money management  CNBCMoney diaries are multiplying. Here's what you can learn from reading about someone else's personal financial life.
Women complain less about bank services - OBS  Independent OnlineWith the focus on women and their finances during Women's Month, the Office of the Ombudsman for Banking Services (OBS) analysed their complaints to ...
Therap's Personal Finance Tool Allows Agencies to Track Routine Expenses and Reporting  PRNewswireWATERBURY, Conn., Aug. 1, 2019 /PRNewswire/ -- Therap's Personal Finance tool allows users to record an individual's transactions for various types of ...
SBI announces special car, personal, education loan benefits ahead of festive season  LivemintSBI is offering education loan with repayment tenure of 15 years.It is also personal loan with tenure of up to 6 years.
Buy quality bonds in primary issues and hold till maturity  MoneycontrolBy going for a primary issuance, you are doing away with the problem of liquidity in the secondary market.
#ICYMI: Your Personal Finance weekly update  Independent OnlineHere is the financial and investing news you may have missed.
Personal Finance Software Market size and Key Trends in terms of volume and value 2019-2025  SocioHeraldThe Personal Finance Software report is a meticulous exploration of the Personal Finance Software market and gives insights such as considerable approaches, ...
How to claim tax exemption on long term capital gains? Answers to your personal finance queries  The HinduQ. I sold a flat for ₹40 lakh in February 2019. I had bought the property in my name in September 2001 for ₹12 lakh. Now, I want to use this entire money to ...
Recession fears should prompt you to revisit your investment strategies  The Washington PostIf there is an upside to the concern of a coming recession, it's that people get more interested in understanding their personal finances. I often have a hard time ...
EP Wealth Advisors Acquires Personal Financial Consultants | Business & Finance  ManchestertimesTORRANCE, Calif.--(BUSINESS WIRE)--Aug 21, 2019--. EP Wealth Advisors, LLC (“EP Wealth”), a leading independent registered investment adviser that ...
How account aggregators simplify sharing of financial data and reduce processing time  MoneycontrolAccount aggregators will help individuals have a single financial view of their money life and share with their financial advisors and banks in a safe and secure ...
Employees' Provident Fund Organisation to invest 50% each in Sensex and Nifty  MoneycontrolThe Central Board of Trustees administers a contributory provident fund, pension scheme and an insurance scheme for the workforce engaged in the organised ...
Five things that can make your retirement stress-free  LivemintNot everyone is entitled to an employer-sponsored pension.Longevity risk, or the risk of outliving the available corpus, is the biggest stress for senior citizens.
Can children’s school fees paid by the employer be claimed for tax deduction?  MoneycontrolStrictly speaking, since the fee has been paid by the employer, it does not satisfy the condition of 'paid by the individual' and hence should not qualify for a ...
Recession or not, a payroll tax cut would be a bad move. It could hurt Social Security.  Washington PostA payroll tax could have created a taxing situation for Social Security.
Here’s Why You Shouldn’t Stop Your Equity SIP Just Yet  BloombergQuintIf you're an equity investor, chances are the recent slide in the market has made you a little worried. It's also possible that you're none too pleased about the ...
How the elderly can bank smoothly without visiting a branch  MoneycontrolSeventy two-year-old Mumbai resident Parag Jajoo often faces difficulty while visiting the bank branch in which he has an account. Withdrawing money and ...
Personal Finance Show: American advantage or less US, and UK equity income winners  Investors ChronicleIn this week's show deputy personal finance editor Dave Baxter makes the case for dialling down the US component of your global equity exposure.
IDFC First Bank increases fixed deposit interest rates for select maturities. Latest FD rates here  LivemintPrivate sector lender IDFC First Bank has revised interest rates on fixed deposits (FDs) days after RBI reduced the lending rate by 35 basis points. The bank has ...
New facility on debit cards, credit cards to make payments easier: 10 points  LivemintThe credit or debit cardholder can give a mandate to the card issuer for automated payments to a merchant.The new e-mandate facility on credit, debit cards ...
PPI claim deadline: ‘A massive bonus’ Woman's delight after scooping £400 - could you?  ExpressPPI claims may be made for mis-sold Payment Protection Insurance policies - however the deadline for doing so is next week. Ahead of the deadline to claim, ...
Inverted yield curves and negative interest rates not to touch Indian shores  MoneycontrolIn India, given the growth and inflation, the rate of interest won't turn negative, at least any time soon.
These post office schemes still offer over 8% interest despite 1.10% cut in repo in 2019  Times NowOut of the nine small savings schemes of India Post, two schemes- Sukanya Samriddhi and Senior Citizen Savings scheme - offer more than 8% annual interest ...
Here's why people aren't saving more in their 401(k) plans  CNBCWe all know we should be putting more money into our workplace retirement plans, especially if we want to be a member of the $1 million balance club.
Banks may seek customer nod before fund transfers to curb illegal deposits: Report  MoneycontrolThe finance ministry has sought the Reserve Bank of India's opinion on mandating banks to notify customers about funds being transferred into their accounts ...
Even If Interest Rates Are Down, Home Affordability Matters  BloombergQuintLately, we have seen that the rate cuts done by the Reserve Bank of India are not being passed on to the end borrower. With four back to back cuts this year, ...
Personal finance: How NHI law will hit your tax, savings, medical cover  BizNewsDawn Ridler chats to Jackie Cameron about what NHI law will mean for your savings and medical cover - and how to keep some access to top-notch healthcare.
The number of 401(k) millionaires hits an all-time high  CNBCTo reach the seven-figure mark, increase your contributions amount by a little bit every year, Fidelity's Katie Taylor says.
Global Personal Finance Software Market Strategic Insights 2019 – Quicken, The Infinite Kind, Alzex software, Microsoft, Doxo – Island Daily Tribune  island Daily TribuneThe Global Personal Finance Software report presents a comprehensive summary, market shares, and growth opportunities of Personal Finance Software ...
How Self-Employment Affects Your Personal Finances  AllBusiness.comAre entrepreneurs better off financially than those who work for others? A new survey reveals the truth about the impact of self-employment on personal finances.
Aspiriant to Host 7-Week Personal Financial Boot Camp to Empower Women in San Francisco  Yahoo FinanceEducational Sessions on Personal Financial Planning Begin September 10 LOS ANGELES , Aug. 20, 2019 /PRNewswire/ -- Who Sandi Bragar CFP ® is a ...
These behavioural qualities explain why women are better investors  Independent OnlineA recent study by the Warwick Business School, which analysed the behaviour and returns of 2800 investors over three years, found that women outperform ...
Five frequently asked questions about your salary  Independent OnlineAs the professional body aimed at promoting the reward profession, Sara often receives questions related to salaries, benchmarking and benefits.
What a payroll tax cut would actually mean for your wallet  CNBCAs President Trump considers ways to stimulate the economy, one option that has come up: reducing payroll taxes. Here's a rundown of what you pay, and how ...
NPS allows you to invest through credit cards. How to do it  LivemintBesides credit card, NPS subscribers can use debit cards and internet banking facilities to contribute online.If they are making payments through credit cards, ...
How to make the most of a personal loan  The Financial ExpressBefore opting for one the trick is to understand your actual financial needs and then choose without hampering your budget.
KeyBank takes page from challengers with launch of personal finance feature  bankinnovation.netKeyBank announced new offerings this week, including an automatic savings tool called EasyUp. That tool automatically transfers money from checking to ...
RTGS money transfer timing changes from August 26: 5 things to know  LivemintAt present, RTGS system is available for customer transactions from 8 am to 6 pm.RTGS transactions happen in real time.
Five tips when considering a personal loan  Independent OnlineA personal loan is money borrowed from a bank or other credit provider that you pay back as a fixed monthly loan repayment.
International Personal Finance (LON:IPF) Stock Price Crosses Below 200 Day Moving Average of $165.19  Tech Know BitsShares of International Personal Finance Plc (LON:IPF) passed below its 200-day moving average during trading on Monday . The stock has a 200-day moving ...
Believing these myths about Social Security could hurt millennials  Dallas NewsAP Photo NYBZ143Few issues unite millennials like the future of Social Security. Overwhelmingly, they're convinced it doesn't have one.A recent...
A student's guide to keeping track of your finances  EngadgetFor many students, their first year at college is the first time they'll be entirely responsible for their personal finances. Such independence can be stressful...
Millennial Money: Make renting work for your financial goals  CNBCTV18In some areas, renting is far more economical than buying a home. But renting can be used to fatten your credit profile as a steppingstone to your financial goals.
Here are the best ways to secure important financial documents  CNBCEstate-planning documents — such as wills, trusts, living wills, medical directives and powers of attorney — are very important, and so is keeping them protected ...
International Personal Finance (LON:IPF) Given “Buy” Rating at Peel Hunt  Sundance HeraldInternational Personal Finance (LON:IPF)'s stock had its “buy” rating reissued by research analysts at Peel Hunt in a report issued on Monday, July 29th, ...
Top personal finance tips: Here’s how an ace SA financial advisor manages money  BizNewsDawn Ridler, an independent financial advisor based in Johannesburg, goes a step further. She says you should learn to be your own Minister of Finance.
EPS amendment APPROVED! Good news for 6 lakh pensioners! CBT okays these changes in Employees Pension Schem...  Zee BusinessEmployees Pension Scheme (EPS) Amendment 2019: Here's good news for lakhs of pensioners under Employee Pension Scheme! In a major decision, the ...
Michigan Radio's Tracy Samilton Wins Personal Finance Reporting Award  Michigan RadioThe Radio Television Digital News Association (RTDNA) and the National Endowment for Financial Education (NEFE) announced today that Michigan Radio's ...
US Personal Finance Software Market to Reach $343 Mn, by 2026, at 5.0% CAGR: Allied Market Research  PRNewswirePORTLAND, Oregon, July 24, 2019 /PRNewswire/ -- Allied Market Research published a report, titled, "U.S. Personal Finance Software Market by Product ...
Personal finance: Tackling scary truths about your SA savings, investments – money expert  BizNewsIn this BizNews Personal Finance podcast, Johannesburg money expert Dawn Ridler chats to Jackie Cameron about how to start getting your personal finances ...
Personal Finance Show: Back in bonds and reasons to track debt  Investors ChronicleIn this week's show deputy personal finance editor Dave Baxter explains why investors are piling into bond funds again and profiles a type of fund they are ...
Personal Finance Society publishes P2P guide following uptick in...  P2P Finance NewsMEMBERS of the Personal Finance Society (PFS) have been showing an increased interest in peer-to-peer lending, leading the PFS to produce its own 'good ...
Consumers racking up debt to make ends meet  Independent OnlineConsumer credit has continued to rise over the past two quarters of this year, which means that consumers are relying more ...
"Women with Money" author on the importance of personal finance  WMTVToday Show Financial Editor Jean Chatzky is in the studio to talk about her new book 'Women With Money.'
CompareAsiaGroup funding: Personal finance platform raises $20m  VerdictHong Kong-based personal finance platform CompareAsiaGroup has raised $20m in the B1 funding round led by Ireland's Experian.
SBI cuts deposit rates, keeps lending rates unchanged  Zee NewsMumbai: The State Bank of India (SBI) cut interest rates on deposits across all maturities on Monday but analysts said it would take time for the country`s largest ...
Personal Finance Software Market 2019: Analysis By Market Size,Application,Market Share,Regional Outlook, Competitive Strategies And Forecast To 2024  Ghanasoccernet.comPersonal Finance Software Market Report Highlights key rising opportunities of the fastest growing Personal Finance Software Market with Key Regions ...
Motor-body repairers adopt pay-before-release policy  Independent OnlineThe “Looting” of VBS Mutual Bank had unintended consequences when it affected the 1000 members of the South African Motor Body Repairers' Association.
How Tan France Retired At Age 33 — Yes, Even Before Queer Eye  Refinery29Before Queer Eye, Tan France was a successful businessman who retired at 33. We talked to him about all things personal finance.
How much to tip when travelling pretty much anywhere  The Globe and MailHow much to tip when travelling pretty much everywhere. Tipping could be the subject that generates the biggest uproar from readers of this newsletter.
International Personal Finance (LON:IPF) Stock Rating Reaffirmed by Peel Hunt  Mayfield RecorderInternational Personal Finance (LON:IPF)'s stock had its “buy” rating reissued by research analysts at Peel Hunt in a report issued on Monday, July 29th, ...
Top 7 Best Personal Finance Website  Demotix.comAll in all, we have included only 7 personal finance websites. If none of them work for you, expand your online search until you have found the one that can.
2019/20 The Personal Finance Awards: Final Shortlist Revealed  The Money PagesNow in its 22nd year, the Personal Finance Awards have long been recognised as a benchmark for excellence in the UK's consumer finance market. Nominee ...

7 Simple Ways To Save Money

Each of us knows how to spend money, but do... Read More

Debt Management ? Watch Out for Bank Fees!

During the last twenty years, banks have offered a number... Read More

Safely Save for Your Childs University Studies Using An Education IRA!

This investment retirement account (IRA) is useful to you as... Read More

Simple Ways to Save Money

Things are so expensive these days. We seem to be... Read More

Risky Business: You May Not be as Daring as You Think

I thought I was through with exams when I finished... Read More

Check Facts and Figures

Are you a check fanatic? Don't worry, you aren't alone.... Read More

The Benefits of Banking Online

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

Saving Dimes Can Go a Long Way

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

Budgeting Before Buying

With interest rates being at an all-time low, I can... Read More

Are You Ready To Be Fired?

Your boss has just informed you that your department is... Read More

Healthy Eating On A Budget

It is possible to eat a healthy, balanced diet without... Read More

How To Protect Yourself Against Identity Theft

Identity theft is a serious crime that continues to grow.... Read More

Dramatically Improve Your Stock Trading Success

Get Access to Realistic profitable strategies & discover the mindset... Read More

Affording a Home

Can you really afford a house? If so, how much... Read More

Saving Money On Gasoline For Your Automobile

The gas that we fill our tanks with every week... Read More

Why Live Frugally

What is it about being frugal, why do it at... Read More

Personal Checks ? Extreme Benefits

Millions of people have a checking account and many people... Read More

Personal Finance - Have Consumers Had a Belly Full of Personal Debt?

For months, we were trigger-swipe happy, putting our groceries, clothes,... Read More

Live Green; Save Green!

Have you seen the recent article on a new "green"... Read More

Why We Are Never Satisfied with What We Have

I have to admit, I do it too. I complain.... Read More

Banks Are More Than Just A Place To Park Your Money

If you've been to a shopping mall lately, you've probably... Read More

Improve Your Professional Image Using Address Labels

One of the simplest ways to improve your professional image... Read More

How to Balance Your Checkbook ? Get a Calculator and Pencil and You are Ready To Go!

Despite how easy it is to balance a checkbook, very... Read More

5 Ways to Absolutely Destroy Your Finances!

Ben Stein has a book called How to Ruin Your... Read More

Succession Planning

Have you ever thought about what you are going to... Read More