Questions to Ask Before Taking a Loan from Your Retirement AccountNovember 23, 2016 | Pete the Planner
Some retirement plans allow participants to take loans from their retirement accounts. Taking a loan from your account is a personal decision, and you should evaluate your options carefully with a financial professional. But first, consider these points if you are thinking about taking a loan from your retirement account.
- Does your plan allow loans?
- What are the fees to set up and maintain the loan?
- Does your plan have a maximum number of loans you may have at one time?
- Does your plan require a minimum account balance before you can take a loan?
You also should consider possible taxes and penalties, and the potential for missed investment returns.
Your retirement account is meant for long-term financial goals rather than short-term objectives. Consider your retirement account a last resort for borrowing money. You may find alternatives that can help you cover your financial needs. For more information, you can view the Pete the Planner video on the downside of loans in the Retirement 101 section of One Day is Today. Pete illustrates how retirement plan loans affect your retirement goals.