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401k Loans: Are They REALLY Worth It?

June 1, 2023 · Personal Finance
401k Loan
Photo by Jay Yuan at Shutterstock

Have you been considering a 401k loan?

Saving for retirement has never been easier through employer-sponsored retirement plans, AKA 401k loans.

Contributions are automatically taken from your monthly paycheck, and some companies even give a matching contribution to encourage participation among their employees.

And even though this money is meant for retirement, and there are penalties for taking out the money, most companies will allow their employees to borrow from their accounts. Typically up to $50,000 can be borrowed, and it must be repaid.

When taken correctly, your retirement savings shouldn’t be affected negatively. So we decide to discuss with our readers how 401k loans work, the benefits and risks of a 401k loan, and alternatives you should consider.

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