Trust me on this one-- there are 7 reasons to take out a loan from your 401k- ranging from education to purchasing a home- NOT hardship- that's different. But as far as the loans go- for whatever reason you use- they don't check your documentation. You can make 2 loans a year up to half of your current balance. To pay back it comes out of your check and you choose the terms..3 or 4 years to pay back.
Has Anyone Successfully Taken Out A 401K Hardship Loan?
- Thread starter NotUnion
- Start date
UpstateNYUPSer(Ret)
Well-Known Member
Sort of true.
You have up to 5 years to repay the loan. You can have 2 loans going at the same time. They DO check your documentation, especially if the loan is to pay for college.
Borrowing from your 401k should be the LAST thing that you do.
Jkloc420
Do you need an air compressor or tire gauge
Yes I took one out to buy my first house. They check the documentation. I paid mine back in five years at 8 percent interest. My payment worked out to be like 50 bucks a check. A lot of people say don't take it out but you are paying yourself back with interest.
UpstateNYUPSer(Ret)
Well-Known Member
Yes, but you are losing on the compounding, which is the main selling feature of a 401k.
Jkloc420
Do you need an air compressor or tire gauge
Yes I understand that. However like I said getting a house was a little bit more important at the time. It to is an investment. Just making the point you are paying yourself back is all.
UpstateNYUPSer(Ret)
Well-Known Member
Jkloc420
Do you need an air compressor or tire gauge
I think it was 4 percent. I misspoke on that. I built up an impressive amount in mine the first 5 years i worked at ups. I was living at home and had no rent payment so the first chance I got to invest in the 401k I started at 25 percent. It was the only thing I could do at the time to build up money fast.
Jkloc420
Do you need an air compressor or tire gauge
I wish are union would ask ups to match or due half of what we invest in are 401ks. I am sure they can write that their match.
UpstateNYUPSer(Ret)
Well-Known Member
Would you rather have your pension or a 401k match?
Jkloc420
Do you need an air compressor or tire gauge
True... I have 2 out right now... You get the option of how to pay it back.... I have one for 3 years the other for 4....You might not want to borrow your own money and pay yourself back with interest, but I do...and others here might too. For those of us with six figures just sitting there and want to use their own hard earned, unmatched money and pay it back with interest, this is good information to have. I used to think what you do so I'm just giving some facts.... Not for you obviously.
I'm trying to tell someone that might want to, obviously not you, borrow their own money- they DO NOT check documentation. Trust me on this. Don't know how you know if you've never done it, but whatever. Just some info for those that are interested-
UpstateNYUPSer(Ret)
Well-Known Member
I took out a total of 8 loans (2 at a time) while my daughter was in college. I can tell you for a fact that I had to submit a bill with the college seal on it each time that I applied for the loan and that failure to do so meant the loan would not be approved.
The loan amount is deducted from your balance and while it is true that you are paying yourself back, with interest, you are also losing the compounding of a higher balance and are thus losing money overall.
Borrowing from your 401k should be your LAST option.
Cool. I guess it was your LAST option 8 times.... Whatever- for others that might want access to their own money and may not fall neatly into the 7 or so reasons for a loan, don't worry so much about the documentation-- it's to discourage you from going through the process.... It's not thoroughly verified.
Maybe different for you-- in MY case and like 10 other guys in my building, wasn't verified. They want to discourage it and they know a certain amount of people won't attempt to get their own money simply by making up some arbitrary loan requirements.
Maybe different for you-- in MY case and like 10 other guys in my building, wasn't verified. They want to discourage it and they know a certain amount of people won't attempt to get their own money simply by making up some arbitrary loan requirements.
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