If you’re thinking about borrowing from your 401(k), consider the pros and cons first.
- Borrowing against your 401(k) is generally frowned upon, but in some circumstances, it can make sense.
- When you take out a loan from your 401(k), you don’t have to fill out a lengthy application, the interest rate is typically lower than it is for a personal loan or business loan, and there aren’t any penalties.
- A big downside of borrowing against your 401(k) is that it harms your retirement saving potential. During the repayment period, you are barred from contributing to your 401(k).
- This article is for business owners and professionals who are thinking about borrowing money from their 401(k) retirement fund.
