Could you please answer a few simple questions?

1. How much did you borrow?
2. What was the interest rate like?
3. How long do you have to pay it off?
4. How much did you pay upfront

Also, how do they base the interest rate?

If I was to take out the money, who would I speak to? Should I go directly to my boss or the 401k investment company? How long does this transaction take? Will I have the money within say like 3-4 days or like 3-4 weeks?

 

There should be a plan administrator at your work and that is who you would go to for a loan from your 401k. Not sure how they determine interest but it don’t really matter that is money you are paying to yourself back to your 401k. In other words no one is making money on your loan, you are simple paying it back with interest and it all goes back into your 401k account.

You can usually borrow up to 50% of your vested amount in your account. You need to find out how much of your money is vested which means is now your money.

Some companies make you wait a year or more until your 100% vested. For example your company puts in $1000 into your account, if your only 50% vested then your only entitled to $500 of that money, 100% invested then the full $1000, at 100% invested it is all your money and the company can NOT take it back.

However if your only 50% invested and you leave then the company keeps 50% of the money they put in. Every penny you put in yourself is yours.

 

The time it takes to get your money can vary. Some companies like mine, since it can take 2 – 3 weeks to get the loan will give you a check written by your employer with the condition when your loan check comes in you have to sign it over to the company.

EDIT: Know that if you don’t pay it all back or leave your job before it is paid back that any amount not paid is subject to federal tax fines of at least 20 – 30% for “early withdrawal”.

 

hmm, can I pay it per month, like say $20 per month or do I have to do 200 per month payment. I have 14000 in there and have worked here for a while. Vested? dont know what that means. I need 5000 of it. I hope I can get it soon.

 

Not sure how you can pay it back, either by week or month that is up to your plan administrator. That’s the one to talk to and he/she will be able to answer all your questions as well as if and how much your vested.

 

Do you think this info will be on one of my statements? Also do you have yahoo, aim or msn where I can ask you some more questions a bit later if you dont mind? Thanks, this is helping me for sure.

 

Yes I have AIM, whats your name on there. You can post and once I get it just edit your post and take it out if you dont want others like the FBI knowing...

EDIT: I can't give mine out because I am being tracked

 

 

I appreciate the helpful info guys. The problem is, if I did take out a refinancing plus cash out or say an equity loan, I would be paying a lot more because I have bad credit. Things came up and basically I dont know how far below 600 it is right now.
Taking out 4-5k out of my 401k is probably the best idea right now. I will research this some more, I dont want to rush into anything so thats why I want to learn as much as possible so there are no surprises.

My aol name is amrant007 , if anyone has done this feel free to im me, I wont stalk you, I promise

 

That’s a good point about a home loan and not tapping into your 401k. If you really need the money and the home loan would cost too much for your budget then the 401k will be fine. What you want to remember is if you take out say $5,000 is even though you will be paying yourself interest on it you will loose out on it possible making you more money if you had not taken it out.

For example if your stocks return say 5% a year you won’t be making that 5% a year on the $5,000 that has been drawn out. You will be paying yourself interest, but may not make out as good as you would with your 401k if you had not taken the money out.

Also, any loan from you 401k does NOT count towards your credit history, in other words all the payments will be made on time because they usually take it out of your pay check but that will not be reported to credit companies. If you take out a home loan and pay it back on time with no late payments it will help you to repair your credit history.

Like I said earlier it will be best to talk to the plan administrator, if they are any good, which I am sure that person is they will be able to tell you all the pros and cons of a 401k loan.

 

I will try to take out 5k and keep my payments under $200. If that is possible them I will likely go with the plan. I dont mind losing out on the possiblility of getting more money.

 

Right now my 401k loan rate is 6%. So for comparison, you could take a $5k loan over 60 months and it would be $96.67 a month or $152 for 36 months.

Be careful tapping your 401k, I know people who have done it and the majority end up never paying it off and taking the penality.

 

The attached isn't everything on the topic, but it touches on most of the high points.

401K

 

Thanks for the link and the info once again.

I will pay off the loan, I know it is a serious thing. 5k is all I need right now and I think I will try to do a 3 or 5 year loan depending on the payments.

 

According to that site:

"First, if you're under age 59 1/2 you'll pay 10% penalty for an early withdrawal from your 401k. You'll also owe income taxes on money that you don't have. And, you'll have less money in the plan when you retire. "

So I will lose my money??????