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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 in  |  Flag
3 Answers  |  33 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.

View all 25 Comments   |  Flag   |  Jun 25, 2012 from Amesbury, MA
Hogg

Hello.

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Regards.

Flag |  Mar 10, 2017
Devlin

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Flag |  11 hours ago

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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.

View all 15 Comments   |  Flag   |  Jun 19, 2012 from Green Bay, WI
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Flag |  Mar 06, 2017
Hogg

Hello.

Greetings, i'm Hogg Geoffrey Graham from LA, I am very happy to receive a loan from the European part of the world, they gave me a loan to settle my hospital bills, They saved me from loosing my house. this message might be of help to you guys that also need a loan in other not to go the wrong side in your search you have to contact this company Michael Clinton Loans. Via E_mail: michaelclinton273@gmail.com

Regards.

Flag |  Mar 10, 2017

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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.

View all 29 Comments   |  Flag   |  Jun 19, 2012 from Lititz, PA
Ellen

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Flag |  Mar 18, 2017
Devlin

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I am Mr. Johnson Devlin loans Service Lender, we are a legit, registered and guaranteed loan company and we give out loans to individuals, companies, government establishments, churches and business organizations and people of all sorts. Are you in need of a loan for any purpose? Are you in a financial problem? Do you need financial solution? Johnson Devlin loans Service is the solution to all your financial problems, our loans are easy and quick. Contact us today for that loan that you desire, we can arrange any loan to suit your budget at only 3% interest rate. If interested, contact us via email: devlinloanfirm@yahoo.com

Flag |  11 hours ago

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