8 responses

  1. Money Reasons
    September 8, 2010

    I think those professionals are trying to prevent the majority of us from cashing in our 401Ks and buying that pretty red BMW that we keep flirting with…

    I have a buddy at work that is considering taking a loan from his 401K to help him refinance his house and avoid PMI insurance. I think in his case, with the mortgage interest rates so low… that it’s a great idea.

    So it depends :)

    Reply

    • Kevin
      September 8, 2010

      Yea it does. If I’m going to save more money and have less stress by taking the money out I’ll do it. But I won’t do it to buy a big diamond ring.

      Reply

  2. JoeTaxpayer
    September 9, 2010

    I would say (keeping an open mind, of course) that I’d take the loan over a withdrawal or cashout any day.
    A hardship withdrawal frequently comes with a rule that you can’t make new deposits for X months after.
    Consider this – you withdraw $10,000, and after penalty and tax, maybe clear $6500. But a deposit of $5000, would only cost you $3750 out of pocket, and after match, you have $5000 (50% of $10K) to borrow at today’s crazy low rates. Take the loan.

    Reply

    • Kevin
      September 9, 2010

      Good point. Sometimes a loan is the best tool for the job.

      Reply

  3. Financial Samurai
    September 9, 2010

    I write off the entire value of my 401K in my net worth. I DON’T count on it being there when I retire, and neither should anybody.

    If it is, great! If not, no biggie! Still max out every year everyone!

    Reply

    • Kevin
      September 9, 2010

      That’s a good thought. Kinda like what you should do with social security…the not expecting it to be there part.

      Reply

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