Borrowing from your 401(k) might seem like just the thing to do in a pinch.
After all, even though you are borrowing, and you have to pay interest, you are making payments to yourself — and the interest you pay goes into your account.
Before you get too caught up in the idea of borrowing from your retirement account, though, it pays to take a step back and think things through.
There are some definite downsides to borrowing from your 401(k) retirement account, and you want to make sure that you are truly prepared for the possible consequences of borrowing from your retirement account — even if you think that it’s an emergency.
The Costs of Borrowing from Your 401(k)
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