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so we have 401k's and retirement accounts.....and I know huge penalties against withdrawing..but does anyone have experience with loans against them at lower interest rates?
suggestions, ideas?
I know people were doing home equity loans for a while, but being in S.Cali our equity is not anything we want to mess with (bought just past peak....but need to maintain equity at some level!), and not sure we qualify for loan in those regards anyways!
thanks!!!
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You need to ask your HR department if your 401k allows loans, some do, some don't-totally up to what your employer decided when the 401k plan was written.
If loans are allowed, you fill out an application with your employer and repay the amount out of your paychecks (I think you have up to 5 years to repay). The interest you are paying goes back into your own 401k account.
The interest rate is typically something like prime + 1 or 4.25% currently.
Beware though, if you leave your employer before the loan is paid off, you either need to pay the balance or it becomes taxable and subject to the early withdrawal penalties.
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