Retirement & Financial Planning Report

Probably not a good idea. There are two big drawbacks to borrowing from a 401k-styled program, such as the federal employee Thrift Savings Plan. 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 withdrew in loans from your 401(k).