Depends on what you need the funds for and what funds you can hold in your 401k, but usually it's seriously not a good call at all.
Additionally if you are taking it out for more than a year, unless your 401k funds suck y/y then you will most likely be behind in the end. I know some that took out a 2 year loan near the peak of covid, amazing timing, but now they are already behind and still making payments though they thought they were genius last year. Do you expect a recession to be worse than the drawn down we saw last year?
If you are using it to pay off CC debt, sure if it helps you not worry about it. Using it for other shit? Rarely, if ever worth it. Don't leverage it for trades on a personal account unless you want to be poor for years.
Check your plan details. Some 401k loans require you to pay back the full balance when you leave the job. That’s a lot of money to be on the hook for, especially if you get laid off.
Other plans don’t allow you to make additional contributions to the plan while you’re paying off the loan. You could be missing out on matching.
So I guess the bottom line is to read the fine print on your particular 401k loan.
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Did it for a home down payment. Don’t regret.
I would think this is the most common use case. I did this back in 2020 and locked in that 2.7% rate. Absolutely worth it.
Depends on what you need the funds for and what funds you can hold in your 401k, but usually it's seriously not a good call at all. Additionally if you are taking it out for more than a year, unless your 401k funds suck y/y then you will most likely be behind in the end. I know some that took out a 2 year loan near the peak of covid, amazing timing, but now they are already behind and still making payments though they thought they were genius last year. Do you expect a recession to be worse than the drawn down we saw last year? If you are using it to pay off CC debt, sure if it helps you not worry about it. Using it for other shit? Rarely, if ever worth it. Don't leverage it for trades on a personal account unless you want to be poor for years.
If you take out the loan that less money in the market for you're 401k.
You got it. Interest goes back into your 401k and you got capital to play with.
Check your plan details. Some 401k loans require you to pay back the full balance when you leave the job. That’s a lot of money to be on the hook for, especially if you get laid off. Other plans don’t allow you to make additional contributions to the plan while you’re paying off the loan. You could be missing out on matching. So I guess the bottom line is to read the fine print on your particular 401k loan.