UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev | Next
Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79089  
Subject: Re: 401k Borrowing Date: 10/30/2007 5:28 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
>> When I borrow against my 401k, 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? Or is my 401k simpoly collateral securing the loan, and the itnerest I pay goes to the 401k administrator? If the latter is the case, do my funds stay invested? <<

You are repaying yourself. If you borrow at 9%, for example, the 9% does get credited to your account. As far as the administrator, a loan typically has a small origination fee (think $50 or so, give or take) plus a few bucks for every quarter the loan is open.

Note that you pay tax twice on every dollar of interest you pay; you pay the interest with after-tax dollars, and then those dollars are taxed again when you withdraw it years down the road.

>> I am not looking for advice on whether I should do this. <<

I suspect that's because you already know almost everyone would advise against it. :-)

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


The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2015!
Fistula Foundation: A World of Good!
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:
Berkshire Hathaway

Collected Mungofitch Quotes
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 Glassdoor #1 Company to Work For 2015! 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.