UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75880  
Subject: Re: 401k Borrowing Date: 11/1/2007 1:11 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
does the interest I pay back on the loan accrue to me? As in, am I really lending myself the money and paying myself interest?

Yes. And no. It's not really a loan at all. It's really a withdrawal that must be replaced a month at a time. The "interest" is actually just extra money that gets contirbuted to your account.

The key is to see what happens to your account when you take out the loan. For example, if your 401k has 100K in the S&P index fund (only), and you borrow 50K, and the s&P has a 20% gain, does your account see a 20% gain on 100K or a 20% gain on 50K?

In my 401k with a major Fortune 500 company, it was the latter. And it way quite clearly spelled out in the plan documentation--once I knew to look for it.

Ray
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Value Hounds

My Big Fat Greek Splat
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement