How Do You Get 401(K) Loans?
When it comes to retirement saving, few methods are more common than investing a percentage of each paycheck into a 401k plan. They reduce taxable income because contributions are made with pre-tax dollars. Furthermore, all gains, dividends and interest grow tax-deferred. These advantages come at a price. Funds inside a 401k are not accessible without penalty until after the account holder is at least 59 1/2 years old. And most companies do not allow withdrawals from the 401k plan while the person is an employee of the company. Fortunately, there is an option to take a loan from a 401k plan. Review your plan document to ensure that loans are offered with your 401k plan. Although 401k loans are allowed by federal law and Internal Revenue Service tax code, there is no requirement that they be offered on any particular plan. The plan document governs a company’s 401k plan and will spell out whether loans are available to plan participants. Examine the plan documents and understand the det
