Retirement & Financial Planning Report

It’s probably not wise to borrow from your 401(k) account. There are two big drawbacks. First, you are giving up the tax-free compounding of the cash you withdraw. The second is that you’re replacing pre-tax money with after-tax money. As a practical matter, for example, if you’re in the 28% tax bracket, it’ll take nearly $1.28 in salary to replace every dollar you withdraw in loans from your 401(k).