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Saturday, December 5, 2009

401k Advice

By Michael Swanson

If you have been dealing with some type of financial issue and you have a 401k than it is probably crossed your mind to use it as a solution. It would be simple since you can quickly and easily take a loan out against it. You should evaluate this choice before taking action however. Keep reading to find some useful 401k advice to help you make a decision.

If there is any way at all that you can completely avoid taking a loan out against your retirement money, do so. After all, this is your financial future and when the time comes you are going to need all of it. Remember your compound interest. The more money you have in the fund and the longer it is there, the more you are going to have in the future when you really need it.

You can also skip the loan process altogether and just go for straight out withdrawing the money. The problem with this is that the there is always a high tax penalty that comes with this option.

If you choose to take a loan out instead, you won't be imposed with a tax penalty. However, limits and restrictions on these kinds of loans are in place. Restrictions will be different depending on your plan. For most, though, there are a few standard reasons that are acceptable.

Some of these reasons would be things like paying for college, paying a mortgage if you are at risk of losing your home and paying a significant amount of medical expenses.

Some of the restrictions you will probably encounter during this process include things like a minimum loan amount, a set length of outset, a maximum amount allowable to borrow and loan fees.

If you are still considering the 401k loan as an option, look for any other option you may have first before doing so. If in your case you have poor credit and just absolutely have to have the money quickly, look in to a short term personal loan as an alternative. - 23208

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