Do to the fact that I have 4 small babies in my home I have a 5 year old, a 4 year old, a 1 year old, and a 3 month old. I have to pay my car insurance along with other outstanding bills.
Edward, ditto what Michael and Andy have already stated.
The answer to your problem does not lie in borrowing from your 401(k). If you are broke now, you will be broke again in a few months, only then you won't have much in your 401(k) either. It would be a very short term fix.
I don't know how tight your budget is, but always start by looking at what you are spending. Make the tough decisions and try to reign in expenses. Depending on your income, you may be eligible for public assistance. Try to put in more hours or pick up a 2nd job. Be aware, if you leave your job for a better paying job, your loan will become a taxable event with a 10% penalty.
I'm sorry we cannot tell you what you want to hear. As a financial advisor, I'd suggest you need a long term solution. It sounds like you are in a tight spot.
Thank you for your question. This is plan specific. Some plans would allow you to have more then one loan outstanding and some do not. You should contact the company that is recordkeeping the plan for you or your HR department to confirm. If they do allow it, you can have outstanding either 50k in loans or half of your vested 401k balance which ever one is smaller. I hope this helps. Let me know if you have any questions. Sincerely Michael www.visionarywealthmgmt.com
It sounds like you have quite a full house full.
Michael is correct that your question is plan specific and you need to check the 401k documents or with your HR department. However, before you consider this, I’d like to provide a note of caution.
Are you aware that if you were to leave your job, voluntarily or not, the 401k loan is due in full? This means you will have to come up with a large sum at just the worst time. If you don’t pay back the loan, the IRS will consider that you took the loan as a distribution (assuming you are younger than 59½) and will assess a 10% penalty. So for example, if you have a loan balance of $20,000, you will have a $2,000 tax bill. Are you prepared to pay that? (You don't want to mess with not paying the IRS!)
If at all possible, you should leave the 401k balance to grow. With the power of compounding growth, the longer you leave it in place, the more it will grow. If you take the money out as a loan, you lose that compound growth.
With four small children, it sounds like your budget is very tight. Would it be possible for you or your partner to pick up a part time job to bring in more income? Or is there anything in the budget that has some wiggle room?
Sorry to be gloom and doom, but it is important you fully understand the negative consequences of tapping your 401k on your long term financial health.