Don’t Waste Your Money & Time Doing These 35 Retirement Mistakes

23. Borrowing From Your 401k

Borrowing from your 401k isn’t always a bad idea, especially if your other loan options come with a higher interest rate. But in most cases, you should avoid borrowing from your 401k or taking out a 401k loan. Doing so will likely set you back far longer than the amount of time it took you to save those funds in the first place, thanks to compounding interest.

If you do plan on taking out a 401k loan, keep the following information from the IRS in mind:

– Generally, you’re allowed to borrow up to 50 percent of your vested account balance to a maximum of $50,000.
– You’ll most likely have to pay back the loan in five years, unless you use the 401k loan to buy a house.