quote:
most plans have a provision that prohibits you from making additional contributions until the loan balance is repaid. Even if your plan doesn't have this provision, it is unlikely that you can afford to make future contributions in addition to servicing the loan payment. Because the whole point of having a 401(k) plan is to use it is as a way to save for the future, you are defeating the purpose of having this account if you use it before you retire.

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Posted by Bayou Tiger

Member since Nov 2003

3660 posts

Posted on 6/5/13 at 7:51 pm to Vols&Shaft83

quote:
most plans have a provision that prohibits you from making additional contributions until the loan balance is repaid. Even if your plan doesn't have this provision, it is unlikely that you can afford to make future contributions in addition to servicing the loan payment. Because the whole point of having a 401(k) plan is to use it is as a way to save for the future, you are defeating the purpose of having this account if you use it before you retire.

That's a crappy provision and was fortunately not a part of my 401k plan. When they say "most plans have a provision" do you think that is anecdotal or actually supported by data? Not a shot at you - really just curious.

This post was edited on 6/5/13 at 7:52 pm

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Posted by dragginass

Member since Jan 2013

2783 posts

Posted on 6/7/13 at 11:13 am to Vols&Shaft83

It all depends on your plan. My plan at work allows for loans from 0-50k, and repayment from 1-5 years at 3.5% interest(currently). Loans do not affect our account balances and we still contribute as normal to our account. However, the interest paid goes back to the plans loan department, and not to our account. Small price to pay for keeping your balance whole, at least when the market is trending up.

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