Military Significant Others and Spouse Support - MilitarySOS.com
Page 1 of 2 12 LastLast
Results 1 to 10 of 18

Thread: 401k Loan

  1. Wine-o
    brahette's Avatar
    brahette is offline
    Wine-o
    Join Date
    Oct 2014
    Location
    DC
    Posts
    2,792
    #1

    401k Loan

    Advertisements
    Has anyone ever taken a loan from your 401k? I'm potentially exploring this option and going to call my retirement account today to get more info on all of the specifics. But just wanted to see if anyone here has done it and if there are any glaring pros and cons to keep in mind.

    The situation is this: my house in Syracuse is listed for sale, I've gotten barely any interest, and the tenants are out at the end of August. I cannot afford both my rent and my mortgage, not even one month's worth. If it doesn't sell, I'll be forced to continue renting it but it will very likely be empty for several months during the transition from trying to sell to getting tenants in there again. I've thought about moving to a cheaper place in Philly, but the rental market here you need 3X rent upfront - again, money I don't have sitting around. And honestly, the deal I have on my current place is one I would never find elsewhere. A friend of mine is tossing around the idea of moving in for a year, but that's still up in the air and wouldn't happen till Sept/Oct. I could ask my Dad for money, but I hate doing that even though he just bought my sister a brand new car and paid for a large portion of her wedding last year.

    Any thoughts on 401k loans or other options in this situation would be great. I haven't looked at personal loans yet. Even though I have a ton of debt (student loans, mortgage, credit cards), I actually have really good credit with a score in the 700's. I've never missed a payment on anything, ever. As much as I've been putting this off, with the tenants out in a little more than a month, I need to have an action plan in place because the bills won't go away (sure would be nice though!)
    ~Becca~


  2. Quis custodiet ipsos custodes?
    Tojai's Avatar
    Tojai is offline
    Quis custodiet ipsos custodes?
    Join Date
    Sep 2009
    Location
    St. Pete FL
    Posts
    30,026


    #2
    One of the girls at work is thinking of doing a 401k loan and she was talking to me about it last week. I remember she said they set it up so that the payments are automatically deducted from her paycheck, not sure if that was optional or not. But they also told her that if she quits or is terminated for any reason, the loan must be paid back right away (I think she gets 60 days to do it).

    My thoughts on 401k loans - I would try a personal loan first, but I just really hate the idea of taking money away from my retirement and I'm paranoid that I got a slow start on saving up so I reaalllyyy don't want to touch it. Personal loans are an option, the interest rate may be higher though.
  3. Wine-o
    brahette's Avatar
    brahette is offline
    Wine-o
    Join Date
    Oct 2014
    Location
    DC
    Posts
    2,792
    #3
    Quote Originally Posted by Tojai View Post
    One of the girls at work is thinking of doing a 401k loan and she was talking to me about it last week. I remember she said they set it up so that the payments are automatically deducted from her paycheck, not sure if that was optional or not. But they also told her that if she quits or is terminated for any reason, the loan must be paid back right away (I think she gets 60 days to do it).

    My thoughts on 401k loans - I would try a personal loan first, but I just really hate the idea of taking money away from my retirement and I'm paranoid that I got a slow start on saving up so I reaalllyyy don't want to touch it. Personal loans are an option, the interest rate may be higher though.
    Thanks! I def don't want to touch my 401k if I don't have to, especially because I haven't been putting money into it recently. I'm still going to see what the process is and how it works, with stuff like the automatic deduction from your paycheck. I quickly checked online for personal loans, and my bank is around 8.5% whereas USAA is 8.99%. A loan amount of $6000 should cover me for 6 months, and if the house sells or re-rents before that period is up, I can pay back what I have left immediately or just put it into savings in case something like this happens again.
    ~Becca~


  4. Senior Member
    ILoveOwls's Avatar
    ILoveOwls is offline
    Senior Member
    Join Date
    Jan 2008
    Location
    Minnesota
    Posts
    4,312
    #4
    I don't know much about 401k loans but I know you can have it taken directly out of your check. I work for a financial service and see pay stubs daily with 401k loans or tsp loans. If you do look into doing a personal loan I would suggest staying away from places like OneMain or LendingTree. They typically lure you in with a pre-approval and low APR but when they actually look at your income a lot of times up the APR dramatically.
  5. Senior Member
    emily511's Avatar
    emily511 is offline
    Senior Member
    Join Date
    Jun 2009
    Location
    NC!
    Posts
    925
    #5
    I did a TSP loan (pretty similar) to help with moving costs....but that's because it was basically interest free, I was 26 (so plenty of time to get it back in there and build up again) and my job is incredibly secure. I even got to set the amount they take out of each paycheck to pay the loan back, which was pretty sweet.

    I don't know how 401K loans work, but if the interest/fee penalty is less than a personal loan, you have a while before retirement, and your job is secure I would go for it. If any of those aren't true, I'd try a personal loan.
  6. MilitarySOS Jewel
    DakotaCowgirl's Avatar
    DakotaCowgirl is offline
    MilitarySOS Jewel
    Join Date
    Feb 2007
    Location
    Home is where our feet land
    Posts
    12,453
    #6
    Have you thought about ways to make more money? Getting rid of things or expense you don't need?
    Finding out why the house isn't selling?

    I believe you would have to pay a penalty to take out the money.
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
  7. Wine-o
    brahette's Avatar
    brahette is offline
    Wine-o
    Join Date
    Oct 2014
    Location
    DC
    Posts
    2,792
    #7
    Quote Originally Posted by ILoveOwls View Post
    I don't know much about 401k loans but I know you can have it taken directly out of your check. I work for a financial service and see pay stubs daily with 401k loans or tsp loans. If you do look into doing a personal loan I would suggest staying away from places like OneMain or LendingTree. They typically lure you in with a pre-approval and low APR but when they actually look at your income a lot of times up the APR dramatically.
    Thanks! Yeah I would only do a personal loan from my bank or another well known like USAA.


    Quote Originally Posted by emily511 View Post
    I did a TSP loan (pretty similar) to help with moving costs....but that's because it was basically interest free, I was 26 (so plenty of time to get it back in there and build up again) and my job is incredibly secure. I even got to set the amount they take out of each paycheck to pay the loan back, which was pretty sweet.

    I don't know how 401K loans work, but if the interest/fee penalty is less than a personal loan, you have a while before retirement, and your job is secure I would go for it. If any of those aren't true, I'd try a personal loan.
    Thanks, will see if this is similar! I'm 30 and my job is pretty secure.


    Quote Originally Posted by DakotaCowgirl View Post
    Have you thought about ways to make more money? Getting rid of things or expense you don't need?
    Finding out why the house isn't selling?

    I believe you would have to pay a penalty to take out the money.
    Thanks! I haven't explored a second job, but I would only be able to do something like that on the weekends since I'm already gone 10 hours per day during the week. My $$ mainly goes to my debts (student loans, credit cards, etc), and just general living expenses (rent, utilities, groceries, etc). I took out about $150,000 to go to college so that's the biggest hit and I've already consolidated, deferred, and done forbearance as much as I can. House isn't selling because it has an awkward floorplan - the seller I bought it from had the same problems selling it as well. I'm going to regroup with my realtor this week and try dropping the price to see what that gets us. Looks like you just get hit with a penalty tax for 401k loan (since it's pre-tax $ to begin with).
    ~Becca~


  8. Senior Member
    Anna*Banana's Avatar
    Anna*Banana is offline
    Senior Member
    Join Date
    Jan 2008
    Posts
    2,127
    #8
    I know you said you didn't want to ask you Dad for money but perhaps you could ask him for a loan and even agree to pay some interest if it helps. That will still be less of a burden/risk than a 401K loan.
  9. Wine-o
    brahette's Avatar
    brahette is offline
    Wine-o
    Join Date
    Oct 2014
    Location
    DC
    Posts
    2,792
    #9
    Quote Originally Posted by Anna*Banana View Post
    I know you said you didn't want to ask you Dad for money but perhaps you could ask him for a loan and even agree to pay some interest if it helps. That will still be less of a burden/risk than a 401K loan.
    Thanks yeah I'm thinking this may be worth a shot. I think I'm going to gather info on the 401k loan and also a personal loan, then send that all to him so he sees what my options are. I hate having to rely on him because it makes me feel like less of an adult. I just wish I had saved more money when I was younger, but that just really wasn't an option because I was putting myself through college (parents paid for 0). If I knew then what I know now, I would've done the college thing totally differently.
    ~Becca~


  10. Senior Member
    jesskuhmarie's Avatar
    jesskuhmarie is offline
    Senior Member
    Join Date
    May 2011
    Location
    NC/Ft. Riley soon!
    Posts
    1,161
    #10
    I don't know if this is for all 401k loans - my mom had a 403b but when she got loans off of it there had to be proof of what she needed it for (she would get them to help me pay my college tuition). Beyond that the way hers worked was definitely better than any personal loan. Other than a fee when she got the loan all of the payments including interest went right back into her account. There was no risk of not paying it back because she had to - and she was not losing any money on paying interest because she was paying herself back rather than a bank. Again, this is just how my moms worked and may not be how they work across the board but if it is similar to that I would definitely do the 401k loan before I payed interest on a personal loan.
Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •