Borrowing from your 401(k), or other retirement investment account to pay off debt is rarely a good idea.
No matter how far or close you are to retirement, borrowing from your 401(k) or other investment vehicle is very risky. First, you are borrowing from your future and may not be able to replenish the account quickly. You will lose the benefit of compound interest and because of that may retire with less than you would have if you had not borrowed from the account. Not to mention, depending on what type of account it is, you may suffer tax penalties if you do not pay back the money in a certain time frame. If you are contemplating borrowing from your retirement to pay down debt, contact us first to see if we have a workable solution!
