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I already have an existing loan from my 401k plan,I need cash but can I still get money out of my account?

Jun 18, 2012 by lorena from Brownsville, TX  |  Flag
3 Answers   |  6 Followers
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4 votes

While your plan offers you the option to borrow, you need to be aware of any restrictions put in place by the plan administrator. Such information may be found on the administrator website or in the plan's summary document available from the administrator or possibly your HR representative.

Generally, if the plan allows loans, the rule is you can borrow up to 50% of your vested balance to a maximum of $50,000 IF you had no other plan loan in place in the 12 month period ending on the day you apply for the loan.

In your case where you have a plan loan outstanding, then the new loan is limited. It is the lesser of 50% of the vested account balance or $50,000 minus the outstanding loan balance in the preceding 12 months.

In addition to the minimum loan amount noted previously, your plan administrator may restrict the reason for the loan to a list of approved reasons (for example, uninsured medical expenses, college tuition, purchase of a primary residence).

Just because you can get a loan from your 401k doesn't mean that you should. Sure, it is convenient, fast and relatively inexpensive. Yes, you are "paying yourself" for the borrowed money and not a credit card company or bank. Yes, the interest is tax-sheltered and there is no tax consequence for receiving funds as long as you pay it back.

But if you are nearing retirement, may be changing jobs or are facing a lay-off in the near future, need the proceeds for meeting daily living expenses (as opposed to some extraordinary or large capital expense) or are using your 401k like a piggy bank to buy luxury items or pay for a vacation, then the answer is simple: Don't do it.

2 Comments   |  Flag   |  Jun 25, 2012 from Amesbury, MA
stephanie

hi my name is stephanie cannon daughter of bruce cannon , my father has a loan on his 401k for bout 4500 ,we are trying to move and in need of another loan ,because the company he has been working for ,for bout 33 yrs is moving, he has the option to retire at the first of the year or keep working for another 5 ,is there any way you could tell me if it is possible to take out another small loan on his 401k , you can email me at heyitslovergurl@yahoo.com please respond its very important to us

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Flag |  Sep 05, 2012 near Arlington, TX
Steve Stanganelli CFP®, CRPC®

http://www.401khelpcenter.com/loans.html

2 likes | 
Flag |  Sep 05, 2012 near Amesbury, MA

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3 votes

By regulation you can borrow up to $50,000 or 50% of your current account value which ever is less. You will need to contact your plan administrator to determine if your plan allows it.

2 Comments   |  Flag   |  Jun 19, 2012 from Green Bay, WI
stephanie

hi my name is stephanie cannon daughter of bruce cannon , my father has a loan on his 401k for bout 4500 ,we are trying to move and in need of another loan ,because the company he has been working for ,for bout 33 yrs is moving, he has the option to retire at the first of the year or keep working for another 5 ,is there any way you could tell me if it is possible to take out another small loan on his 401k , you can email me at heyitslovergurl@yahoo.com please respond its very important to us

Flag |  Sep 05, 2012 near Arlington, TX
Rachael

Hello every one please i will like to talk about the goodness of GOD in my life after so many months of trying to get a loan on the internet and was scammed the sum of $3,200 i became so desperate in getting a loan from a legit lender online then a friend told me that there is a legit loan company where she got her loan fast and easy without any stress so he introduced me to a Man called Mr Marcos who is the CEO Marcos Ramsey Loan Company, So i applied for a loan sum of ($85,000.00) with low interest rate so the loan was approved and deposited into my bank account without stress that was how i was able to get my loan, so i was able to pay off my bills,bought a new car,paid for my new accommodation in Chicago,not just that i am now living a good and comfortable life with my three kids. i am advising every one who is interested in getting a loan fast and easy to kindly contact them via email:(marcos.ramsey011@gmail.com) as well, So thanks as you read the greatest testimony of my life story and thanks be to GOD almighty for his goodness upon my life.

Flag |  Oct 27, 2014 near Marlow, NH

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1 vote

Some plans may offer more than one loan at a time, and usually a loan minimum of $1000.00 As Tony mentioned, your plan administrator will be able to guide through this process.

1 Comment   |  Flag   |  Jun 19, 2012 from Lititz, PA
Rachael

Hello every one please i will like to talk about the goodness of GOD in my life after so many months of trying to get a loan on the internet and was scammed the sum of $3,200 i became so desperate in getting a loan from a legit lender online then a friend told me that there is a legit loan company where she got her loan fast and easy without any stress so he introduced me to a Man called Mr Marcos who is the CEO Marcos Ramsey Loan Company, So i applied for a loan sum of ($85,000.00) with low interest rate so the loan was approved and deposited into my bank account without stress that was how i was able to get my loan, so i was able to pay off my bills,bought a new car,paid for my new accommodation in Chicago,not just that i am now living a good and comfortable life with my three kids. i am advising every one who is interested in getting a loan fast and easy to kindly contact them via email:(marcos.ramsey011@gmail.com) as well, So thanks as you read the greatest testimony of my life story and thanks be to GOD almighty for his goodness upon my life.

Flag |  Oct 27, 2014 near Marlow, NH

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