how do i boorow from my 401k

    0  Views: 291 Answers: 1 Posted: 12 years ago

    1 Answer

    things you'll need:

    * Prospectus for 401k plan

    * 1

    Take out a loan of up to half your total principal in order to pay off important financial obligations. The federal government caps the cumulative amount of loans in a given year to $50,000 per account holder.
    * 2

    Establish a budget that helps you pay back the money you borrow from your 401k account. The standard repayment period for a 401k loan is 5 years, though certain levels of hardship allow for a longer repayment period.
    * 3

    Read through your 401k plan's fine print to determine whether there is a minimum loan level for each transaction. Some 401k providers require a minimum amount borrowed by a user as a way to determine the level of hardship during account audits.
    * 4

    Search your 401k information to assess restrictions on the number of loans and transactions you can take from your account. You need to know how many times you can borrow against your retirement savings to determine the amount of money you need to take out with each transaction.
    * 5

    Assess the definitions of hardship given by your employer, 401k company and the federal government. Traditional hardships include potential eviction, payment of college tuition and uninsured medical costs that cannot be covered by your net income. You need to follow these guidelines to the letter to prevent penalties and income taxes on borrowed money.
    * 6

    Maintain steady employment as you borrow 401k funds to avoid withdrawal fees and penalties. 401k loans are repaid without income taxes and additional penalties in order to assist professionals financially. If you lose your job, the remainder of your loan is included in your annual tax liability for that fiscal year.
    * 7

    Plan your monthly budget according to the repayment amounts taken from each paycheck. Your employer will take out monthly payments for a 401k loan and distribute it back to your account through the 401k manager.

    Read more: How to Borrow Money From a 401k |

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