Can I borrow from my 401k penalty free?

As we all know, times are hard. I need some fast cash now, but don't want to borrow from friends or family, or get a title loan. Someone told me right now you can borrow or take money out penalty free. Does anyone know?

I have about $2,000 in my 401k and need about $500 or so for bills, etc.

7 Answers

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  • 1 decade ago

    Maybe.

    A loan from a 401k is not subject to tax or penalties but the 401k trustee may not allow you to do it. Some 401k plans have restrictions on 401k's (such as must be used for home purchase) and some don't allow loans at all.

    Talk to your HR person at work.

  • 1 decade ago

    You may be able to borrow without penalty. Your employer sets the terms of withdrawal not the government. Most employers only allow withdrawals for a limited number of reasons because they don't want the plan to become a revolving credit source. The only government restriction is that whatever the terms are they must be equally applied to everyone.

    So to answer your question ask your employer if your need qualifies or read the plan information which was given to you when you signed up.. If you simply withdraw money you will have to pay taxes on it as if it was ordinary income plus a 10% penalty.

  • hmmm
    Lv 4
    1 decade ago

    Yes, but you might have to pay interest (to your 401K account)in addition to the money you borrow .

    The real danger in borrowing from a 401K, is that if for some reason you get laid-off, you are required to immediately repay the money borrowed.

  • 1 decade ago

    No, there will be penalties. You can only use 401k money for catastrophic medical bills, college or a first time home purchase. Can you lower your contribution to the plan for a bit until you get the money you need together? Then you can increase it later on after your bills are paid.

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  • 1 decade ago

    You cannot take money out of a 401k without being subject to tax withholding and penalties.

  • Anonymous
    1 decade ago

    The financial institution where you have your 401k invested would be able to give you all the details regarding your portfolio.

  • Anonymous
    1 decade ago

    No, there would be a penalty of like $90.00

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