Money Watch Q & A: Borrowing From Your 401K - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Money Watch Q & A: Borrowing From Your 401K

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Is borrowing from your retirement savings a good or bad idea?  According to our Money Watch Q & A expert, Doug Nelson of TCI Wealth Advisors, it depends on how you plan to use the money.

Nelson says if you plan to take out a loan and repay it within five years, then borrowing from your 401K might be a good option. It does not require a credit check. However, if your purpose for pulling the money is for something more long-term, he advises against it. Nelson says penalties will start adding up if you do not pay back the loan before the allotted deadline. If you are using the money for buying a house, the deadline is often extended.

If you take a loan out and leave your company, Nelson says you typically have to pay back the loan immediately or within six months, otherwise it will be considered a distribution and you will be taxed accordingly.

To learn more, contact Nelson at his office:

4757 Caughlin Pkwy., Ste. B
Reno, Nevada 89519
Phone: (775) 746-6255
Toll Free: (877) 733-1859
Fax: (775) 746-6254

Written by Kristen Remington

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