Comments on: 401(k) Loan/Debit Card: A Bad Idea in General. But What if as Last Resort?

By: What You Need to Know about Early Withdrawal from Retirement Accounts

What You Need to Know about Early Withdrawal from Retirement Accounts — Wed, 25 Mar 2009 01:57:46 +0000

[...] between Traditional and Roth IRAs). If under certain circumstances (such as those discussed in the 401(k) debit card post) the plan participant decides to withdraw money from his/her retirement savings accounts before [...]

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By: MossySF

MossySF — Tue, 18 Mar 2008 08:56:09 +0000

On the otherhand, I get the feeling that many people raiding their 401Ks to “save their homes” will only get a temporary reprieve. You have to be realistic — is this just a temporary situation you can bounce back from? Or were you just a fool for buying too much home with some exotic loan and can’t afford the regular payments? If so, using 401K money only leaves you in the same position a few months later except with an empty 401K account and taxes owed (if you can’t pay back the loan). Might as well run on the credit cards, declare BK and leave your 401K assets protected.

By: Link roundup: Palm Sunday edition | Mighty Bargain Hunter

Link roundup: Palm Sunday edition | Mighty Bargain Hunter — Mon, 17 Mar 2008 10:12:26 +0000

[...] The Sun’s Financial Diary examines the pros and cons of a 401(k) loan/debit card. [...]

By: Jeremy

Jeremy — Thu, 13 Mar 2008 15:17:53 +0000

When it comes to an emergency or last resort, there is nothing wrong with borrowing from your 401k. That is why most plans have loan and hardship provisions.

With a hardship, you actually have to qualify by being faced with a clear set of criteria that proves it is a hardship. Unfortunately, loans don’t have this, and oftentimes you can simply call your provider or send in a form to borrow money no questions asked.

This is where you have people who end up tapping into their retirement fund for purchases that aren’t threatening the ability to put food on the table or shelter over their heads. Instead you have people taking vacations or buying Christmas presents with their retirement funds.

And the easy access that a 401k debit card will provide just makes this even worse.