401(k) Loans: Good Idea?

With the ever-lengthening financial crisis still dragging on, some people are beginning to look at their decreasing 401(k) balances with an eye towards borrowing from them. At most companies, taking a loan against a 401(k) plan is a permissible event. But is such a loan a good idea?

While a 401(k) loan is nearly always preferable to an outright distribution from your retirement plan, there are several significant disadvantages to borrowing from your 401(k) including:

• Lost investment growth
• Negative tax implications
• Risk of termination

Make sure you understand the consequences before you sign on the dotted line.