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Author: tmackfool Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Funding Roth IRA with 401k loan Date: 10/2/2000 10:26 PM
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I'm thinking of borrowing from my 401k to fund a roth
IRA, what would be the downside to doing this?

Thanks in advance. Kurt



Sounds like a bad idea to me.

If something happened and you had to leave your current job, the entire 401k loan would have to be paid back immediately. If not done immediately, you get hit with a huge tax penalty.

A lot of people I have talked to over the last several years have come to think of their 401k as a savings account rather than a retirement account. Put the money you would have used to pay back the 401k loan straight into a Roth IRA account. If you do not have the minimum to open a Roth with the financial institution of your choice, then why not save up the money in a regular savings account at the bank? When you reach the minimum to open a Roth account, close out the banks savings account and send the money to your Roth.

Hope this helps,

Taylor
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