Pros and Cons of Borrowing From Your 401(k) |

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.

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