You must repay the loan within five years, paying back at least quarterly but on an after-tax basis. In addition, you'll also have to pay interest, which is the prime rate plus 1 percent.
Not surprisingly, financial advisors recommend against loans. "You could be missing out on upside," said Penney of Penney Financial. If your repayment period had run from, say, 2009 to 2014, that's a lot of bull market your money missed.
Another downside: If you default on the loan or leave your company without paying back the full amount, the amount outstanding becomes taxable and subject to a 10 percent penalty.
But there are times when a 401(k) loan can be acceptable, said St. John of Financial Avenues. In fact, she's done it herself. In 2013, St. John and her husband were closing on a house and needed cash for the down payment; their old house wasn't even on the market yet. She took a loan and paid it back two months later. "I would only recommend it if you have a large balance and you can pay it back quickly," she said.