Read This Before Borrowing From Your 401(k)
Sometimes, we run into situations where we're desperate for money. Maybe your car broke down out of the blue. Maybe you lost your job, and don't have emergency savings in the bank to tide yourself over until a new one comes along. If you're sitting on a sizable 401(k) plan, you may be tempted to borrow money from your own retirement fund rather than take on outside debt or continue to struggle. But that's a risky move that could hurt you in the long run.
The money in your 401(k) plan can't be withdrawn prior to age 59-1/2. If you remove funds before reaching that age, you'll be hit with a 10% early withdrawal penalty on the distribution you take.
A 401(k) loan works differently. When you take out a 401(k) loan, it's not considered an early withdrawal because you're only borrowing that money temporarily.
Quelle Fool.com
