NY (TheStreet) — The roof begins to leak, kid requires braces, a partner loses employment. At once or any other, most people has an abrupt, unanticipated importance of money. Therefore the 401(k) may appear to be a lifesaver.
Though experts typically caution against using loans through the 401(k), the strategy has its points that are good. The interest rate is relatively low, often the prime rate (currently 3.25%) plus 1%, and you pay the interest back into the account, not to an outside lender such as a credit card company for one thing. Which means you’re actually having to pay yourself.
You may not need certainly to leap through approval hoops such as for example an income or credit check, and there are not any income tax effects or charges in the event that loan is reimbursed in accordance with the guidelines. Continue reading article