Actually , the 401k( is the retirement plan) – and is the money which every contributor pays for his retirement , and the advantage for this is that the interest goes back into the contributor account .
Most of the specialist recommend that the contributor should not borrow the money from his retirement plan (401k) . And , that’s because there are som pros and some cons :
The cons for 401k :
- the contributor doesn’t have the tax advantage anymore . The loan is not tax deductible.
- the contributor loses interest from those money from his retirement plan
- the contributor can get some additional tax penalty
- the contributor may not be allowed to pay for his retirement plan , till the loan is repaid.
- the contributor is diminish his period of “good ” contribution for his plan
The pros for
01k :- the contributor can have access very easy to this loan : simply by calling the administrator of his plan.
- low interest rate.
- No credit score concern anymore for the contributor , because is about his own money , which he is borrowing.
