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

By: Raj

Raj — Fri, 20 Nov 2009 19:09:54 +0000

All the calutation doen on 401K are “if a person saving $100 and expected to earn 10% on it on averge”

I am not sure if any one rememebrs what happned to all the 401K account during this crash and how much are they earining today

If some one has the discipline to make pamyents correctly probably they can earn some money in 401K by paying interet to thier own 401K

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: 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.