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How do i get a loan from my 401k?

Dec 08, 2014 by walter from Pittsburg, CA in  |  Flag
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Peter C. Karp Level 20

Walter

You will need to contact your HR Dept. to find out if your plan allows for loans and the details will be in your Summary Plan Description document. If a loan is allowed it is usually for a minimum amount of $1,000. The maximum loan amount allowed is the lesser of 50% of your vested balance or $50,000. I always advise seeking other options for taking a loan instead of using your 401(k) plan as this is money targeted for your retirement. The loan would be repaid through salary deferral with AFTER tax dollars. If you terminate employment the loan is due and payable in full and you will be taxed on the outstanding balance as income. Talk with your financial advisor or tax accountant to determine the best options for you. Our office is in the Bay Area and you are welcome to call me if you have more questions.

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Comment   |  Flag   |  Dec 20, 2014 from San Francisco, CA

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Good Evening Walter!

Depending on your 401k provider the forms may be available online. If not contact your HR department or even call the customer service department of your provider and ask them for assistance.

You should also make sure to consult with a financial advisor about this to comfirm it's the best option for your situation.

Wish you the best. Call or email if I can provide any further assistance.

Brett

Comment   |  Flag   |  Dec 08, 2014 from Carlsbad, CA

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Contact your HR department or whomever is the person in your office responsible for administering your plan and tell them you would like to take out a loan. They will provide you with the paperwork you need to complete to get the loan. Normally you can borrow up to 50% of the vested value of your account up to $50,000. You will need to arrange to start paying it back in installments with payroll deductions. If you leave the company, the entire value of the loan will come due. Some companies also make this paperwork available on their 401K website. If you have web access, check there.

Comment   |  Flag   |  Dec 08, 2014 from Fort Washington, PA

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Depending on whether or not your plan even provides for a Loan, you usually need to begin the process with your Human Resources department. They will be able to answer your questions more specifically! Good luck!

Comment   |  Flag   |  Dec 11, 2014 from Bloomingdale, IL

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