401k Account

Dell
Y@B

Go to company page Dell

Y@B
Feb 21 13 Comments

Are we allowed to withdraw loan from 401k right after someone resigns and joins a new company? I ask this since 401k account started when i was in previous company with the company contribution on it. Will they impose any restrictions.

Dell Boomi EMC Dell
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 TOP 13 Comments
  • Merck
    Guate

    Go to company page Merck

    Guate
    You are allowed to borrowed against your 401k, but is just not a good idea to do so. That should be your LAST last resource if you really need to borrow money.
    Feb 21 5
    • If your cost of borrowing exceeds your expected return in the market AND you expect to be continually employed at your current job, I don't see anything wrong with borrowing from your 401k.
      Feb 21
    • Dell
      UFpM83

      Go to company page Dell

      UFpM83
      @ITQk55. What about risk of losing your job and then owing penalties and fees to the IRS if you can't pay it back?

      Plus in a perfect world you're going to earn much more than the 5 to 6% by leaving your money in the 401K. So you are you're actually losing money during an average market with a 401k loan.

      It's incredibly hard to time the market and it's highly unlikely that the percentage your 401k loan is paying will be greater than the long-term market outlook.
      Feb 21
  • IBM
    curiousuxr

    Go to company page IBM

    curiousuxr
    I think you need to be at the existing company to take out a loan. Transfer it over then you can do. I wouldn’t recommend taking a loan out of your 401k though.
    Feb 21 2
  • IBM
    curiousuxr

    Go to company page IBM

    curiousuxr
    During that borrow: you can’t contribute anymore, your dollars that you pull out aren’t working for you, if you lose your job you lose that collateral, etc. I’d recommend talking to an advisor or doing a Google search to learn more!
    Feb 21 2
    • Dell
      UFpM83

      Go to company page Dell

      UFpM83
      Unless they're rolling over their 401k, they can't contribute anyway.

      Also, you can contribute to your 401k while you have a loan. I've done it. But 401k rules around this can vary from employer to employer
      Feb 21
    • Dell
      UNpu07

      Go to company page Dell

      UNpu07
      When I leave a company I always roll the old 401k out to an IRA so I have full investment control. You COULD roll it into the new company’s 401k, but it severely restricts investment options. True you can’t borrow against an IRA like you can against a 401k, but I agree with others here that it virtually never pays to do so, and should only ever be used as last resort. Don’t restrict your investment options for the flexibility to take out a bad loan.

      TC, OP?
      Mar 3
  • Meta
    richhea

    Go to company page Meta

    richhea
    Check the details for your plan - a lot of the cons mentioned are plan specific. Things like being able to contribute with outstanding loan, what happens when you leave the company, etc.
    Feb 21 0