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Stocks & InvestmentsSep 17, 2023
Oktaspy_qqq

What are pros and cons of 401k loan?

I have roughly 300k in my fidelity 401k and some one told me we can get 50% of our investments and all the interest payments goes to your account too its hard to believe. Tc: 280k

Google KUwQ28 Sep 17, 2023

There's a max of 50k loan amount unless you have very specific circumstances

Intel 0101_1010 Sep 17, 2023

Can we take this for car loan ?

Atlassian salta Sep 18, 2023

^ This. - Max 50k/50%, whichever is smaller - general purpose loan (anything you want, car, mortgage, whatever, almost instant approval) allows up to 5 years to pay back - mortgage only, allows up to 10 years, but you have to go through a bunch of paperwork

Capital One BbbE13 Sep 17, 2023

Pros - you mentioned it in the post, cons- if you loose your job, or quit the whole amount is due immediately, you might loose on some compounding but 5-8 % interest paid to self should help

Intel ePoX82 Sep 17, 2023

You will not have to pay all the loan if you change job. That is a misconception. They will ask for your bank account they can deduct monthly due amount from.

Atlassian albertsonz Sep 17, 2023

Another potential drawback is you can't contribute to 401k (no employer match either) until you pay off the loan. Check your specific 401k plan to see if it applies to you

Microsoft hykud Sep 17, 2023

Not true

Atlassian albertsonz Sep 17, 2023

I had to re-check and it varies by plan. I’ll update since it could be misleading

Apple XaRy Sep 17, 2023

Say you take out 50k and pay back 50k+25k(interest). That 25k interest comes out of post tax income into pre tax savings. Then at retirement gets taxed again, so it gets double taxed.

Microsoft hykud Sep 17, 2023

This 👆🏾

Okta spy_qqq OP Sep 17, 2023

Thanka make sense