You Should Not Take a 401k Loan

401k loanThere are only a few things in life that will bring me to making the face you see in the picture to the right.

The major thing is telling me that you think that In-N-Out Burger isn’t a good burger. Don’t even go there.

At a close second, is telling me your going to take a 401k loan because you need to pay for <fill in the blank>.

C’mon, really?

Why do you do need to borrow from your 401k?

Isn’t that what your emergency fund is for?

It should be!

If you’re contemplating doing this, here’s why you should not take a loan on your 401k…

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401k Hardship Withdrawal Rules

Times have been tough for a lot of people.

I have several clients that were laid off from a major manufacturer several years ago and are still struggling to find work.

For many Americans, this is an all too familiar situation.

House or rent payment. Utility bills. Late credit cards notices. Debt collectors calling you every hour on the hour.

All these add to the daily stress of you wondering how you’re going to make it financially. When times get tough and people have nowhere to turn, many look to their 401k to help bail them out.

401k Hardship withdrawals have been on the rise. According to a study by Fidelity this past August, 2.2% of all 401(k) participants had made a hardship withdrawal at some point over the preceding 12 months. That’s up from 2% in the prior year, and was the highest level in 10 years.
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