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Retirement plan loans are risky business

 
By Malcom Berko    Comment on this article Leave a comment
Published: September 7, 2008

Dear Mr. Berko: Over a year ago, the employees of our company and I received debit/credit cards that let us take money from our 401(k) accounts. This is a great thing because instead of paying 22 percent or more in interest plus penalties and charges to Visa or Master Card, we would only pay 10 percent interest. What's more, what interest we paid would go to our 401(k) account because we had borrowed the money from ourselves. Because our home-equity loan was up to the limit, we used $23,000 from my 401(k) last year to purchase a remodeled kitchen for my wife and a home entertainment center for me.

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Related Topics: Business, Personal Finance, Retirement Planning, Financial Planning, 401(k)s



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