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Upbeat-Ad2878 t1_jegdw9n wrote

I think a 401k loan is a bad idea for the majority of people. I would recommend getting a loan from a bank instead. If you can get a loan from the bank you’re going to save a ton compared to the interest you’d pay otherwise

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85-900t t1_jegvdft wrote

So bank loans charge interest, let's say 10%. The bank gets it.

A 401k loan charges interest to the owner, but goes back to the account. 401k loans are charging 9-10% right now versus paying out to the bank.

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Upbeat-Ad2878 t1_jegwsug wrote

You raise good points, but really I think it depends on the terms of the 401k loan. You’d have to read the plan document to see what it says about the interest. I was more so saying don’t do a 401k loan because of potential penalties if you don’t repay it back in a certain amount of time, mandatory holding periods must be reached or there’s required 20% withholding, etc.

I was thinking of other factors too like building / rebuilding credit, how much of an account balance is in there vs how much is in credit card debt

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Full_Prune7491 t1_jeh44uu wrote

People never read the terms. Then they get laid off and blame the IRS for huge tax bill.

Not a good idea to take from 401k

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Upbeat-Ad2878 t1_jeh4erf wrote

I agree. People don’t take the time to understand the rules then get pissed when they do something not knowing what the consequences will be

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