Reasons to Borrow from Your 401(k)
Ideally, everyone would have a savings account or emergency fund to draw on when they face unplanned expenses. But in the real world, it’s common for cash flow to fall short of one’s needs from time-to-time. For many people, their largest financial asset is their retirement savings in a 401(k) account.
To help individuals manage the challenge of both saving enough for retirement and setting aside money for unplanned expenses, most 401(k) plans allow the business owner and employees to take loans from their 401(k) accounts. When the 401(k) loan is repaid to the plan account, with interest, an individual can stay on track with their retirement savings even while addressing short-term cash needs. But loans that are not repaid can put retirement savings at risk.
The maximum amount that you may take as a 401(k) loan is generally 50% of your vested account balance, or $50,000, whichever is less. If your vested account balance is $10,000, you may borrow up to $5,000.
All 401(k) plan loans must meet the following requirements:
The business owner has some flexibility in designing a loan program for their 401(k). For example, they may choose to set a limit on the number of loans an employee may take at one time or within one year or set a minimum dollar amount for a loan.
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Our consultants have an average of 10 years experience and can help you navigate the 401(k) landscape–no obligation. Our team is here when you’re ready to get started on your 401(k). Schedule a time that works for you.
Although general financial wisdom tells us we shouldn’t borrow against our future, there are some benefits to borrowing from your 401(k).
In need of a 401k plan? Refer Ubiquity to your company and get $250!
Refer Your CompanyAlthough paying yourself interest on money you borrow from yourself sounds like a win-win, there are risks associated with borrowing from your retirement savings that may make you want to think twice about taking a 401(k) loan.
Sometimes the immediate need for money outweighs the potential risk of a 401(k) loan. But before you decide to borrow against your 401(k), be sure to consider your alternatives.
If you are a small business owner and need a 401(k) plan for yourself and your company, only Ubiquity offers flat-fee plans plus free expert advice. We’ll fully customize your 401(k) to meet the specific needs of your small business.
Setting up a 401(k) can be complicated. Only Ubiquity gives small business owners access to 401(k) experts in addition to industry leading low flat-fees. Each sales expert has over a decade of experience assisting business owners in 401(k) plan design. Take advantage of this free benefit.
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San Francisco, CA 94104
Support: 855.401.4357
© 2023 Ubiquity Retirement + Savings
Privacy Policy
Do not sell my info
44 Montgomery Street, Suite 300
San Francisco, CA 94104
Support: 855.401.4357