You already know you shouldn’t tap your retirement plan to fund frivolous purchases, yet in a handful of cases it just might be okay to take a loan.
Retirement plans account for a large chunk of personal wealth: The average 401(k) plan account balance at Fidelity Investments hit $102,900 as of the end of the first quarter of 2018.
In order to get the most out of your retirement plan, you should let the money accumulate over the course of your career. Time and compounding market returns are your 401(k) plan’s best friends.
But, sometimes, emergencies and long-term planning goals will call for the more drastic step of taking a plan loan.
"Plan participants understand that the money is sacrosanct, but they may find themselves in a situation where the 401(k) is the largest source of capital they have," said James A. Cox, financial advisor at Harris Financial Group in Richmond, Virginia.
Here's how to borrow from your 401(k) without ending up with a big tax bill.