Taylor Robert Schulte

Great question, Marvin. There are many schools of thought on this topic so I would expect a diverse group of answers.

We often here the saying, "cut your losers and let your winners ride/run." Well, how do you actually define which stocks are winners and which are losers? You might have purchased Apple in 2000 and sold it at a loss a few years later, convincing yourself it was a "loser." I think we both know how that story would have ended. In contrast, you might have owned a company like Research in Motion and considered it a "winner" while riding the stock up to $140+ in 2008. The stock trades for $8 today.

When working with clients I stress to them the importance of knowing what they own and, more importantly, why they own it. We have a fundamental reason for each position we hold in a portfolio. If you don't have a good reason you might consider removing the position(s) and finding a more appropriate investment that will help you reach your goals.

It is important to continue to keep your time horizon in mind as you make these decisions as well. According to an analysis by Dalbar, the average investor earned 2.1% over the twenty year period ending Dec. 31, 2011. The S&P 500 index returned 7.8%, while the Barclays Capital US Aggregate Bond Index returned 6.5% over the same time period. Furthermore, inflation (CPI) grew at an annualized rate of 2.5% during the period. So the average investors' net real return was -0.4%. The reason? I might argue that the average investor often lets their emotions get in the way of making good investment decisions. Determine your risk tolerance and time horizon, design an asset allocation that is appropriate for you (or seek the help of an investment professional), commit to a plan, and you will succeed.

My first suggestion would be to request a copy of your plan document and/or speak with your benefits department to retrieve details on your plan. If you haven’t done so already, you might want to verify you are able to borrow from your 401(k) for the purpose you had in mind. Some plans allow you to borrow for any reason while most have some restrictions in place. Furthermore, the interest rate is established by your employer and although it seems that most plans use prime rate plus 1-2% it wouldn’t hurt to review your plan document to confirm this. Lastly, it is possible your payback period could be extended beyond 5 years if you are borrowing funds to purchase a home. Once again, you will want to check with your plan documents or benefits department to determine your repayment period.

I think it is also important to point out that while your 401(k) contributions are made with pre-tax dollars the loan repayments will be paid with after tax dollars. This may result in you paying tax twice when you withdraw these funds in retirement. This consequence, along with others, has led many to advise against borrowing from your 401(k) if at all possible. You might consider talking with an investment professional and/or tax advisor to determine how borrowing from your 401(k) will impact you.

In addition to Erik's link, you might also review the Brightscope page for your plan:

http://www.brightscope.com/form-5500/basic-info/63393/Quest-Diagnostics-Incorporated/64461/The-Profit-Sharing-Plan-Of-Quest-Diagnostics-Incorporated/

Specifically, form 5500 includes contact information for your plan sponsor. If you have questions or concerns regarding your account that might be a good place to start.