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Question: 
 
Should I ever borrow from my 401K? 
 
Answer: 
 
One of the great vehicles we have now, when it comes to planning for 
retirement, is a 401(k). The government allows us to contribute a lot 
of our income to a 401(k), and in many cases, our employer will even 
match some or all of what I contribute to my 401(k). 
 
When your employer matches any part of your contribution, it’s best 
then to maximize the contribution that you make to that 401(k), in 
order to maximize the long-term benefit that you get from the 
investments within the 401(k) growing in value. 
 
Now, here’s a dilemma. We’re also permitted to borrow from our 
401(k)’s for various things, such as a home down payment, for 
example, or a medical emergency.  
 
The question is, “Should I ever borrow from my 401(k)?” Well, the 
answer is, only in the most extreme circumstances should you borrow 
from your 401(k). Yes, you’re borrowing from yourself, but I’ve found 
that people who borrow find it very difficult then to repay, so what 
you’ve done when you borrow is that have really taken some of your 
future out of play, if you will. You don’t have that amount of money 
that is compounding for you for the future. 
 
So, here’s my recommendation: put as much as you can into your 
401(k), and don’t borrow unless it’s an extreme emergency—certainly 
don’t borrow for another type of investment, and don’t borrow money 
from your 401(k) to spend. 
 
 
 
If you’re going to borrow from your 401(k), it should be in only the 
most unusual of circumstances. 
 
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