Taking a loan from your 401(k) "is never a good idea," says Catherine Golladay, vice president of 401(k) services at Charles Schwab.
A recent Schwab study found that nearly a quarter of 401(k) participants take loans from the retirement plans.
A quarter of those who have taken a loan from their 401(k) said they used their early withdrawals to pay everyday bills. Almost 10 percent said they used the money to "buy something special," and another 5 percent used the withdrawals for vacations, suggesting some workers may be making the withdrawals without a full understanding of the consequences of doing so.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
