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A 401(k) Plan Allows Workers To Save For Retirement While Deferring Income Taxes On Saved Money Or Earnings Until Withdrawal. Welcome To 401kGuide.us. This Free Information Resource Will Help You Make Informed Decisions About Your 401(k) Options. As
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Everything You Must Know About 401k, Roth IRA, 401k Rollover, 401k Information, Individual Retirement Account And 401k Plans.
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How To Buy Real Estate With Your IRA
Use Your Self-Directed IRA, Roth Or 401(K) Plan + Loans To Buy Investment Property.
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Tax-Free Real Estate Investing
Insider Secrets On How To Make Tax Free Profits In Real Estate Using Your IRA. Create Your Own Private Bank.
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401k Plans, Roth Ira News |
401k Investor Trounces Warren Buffet in 2011 My friend Wally beat all of the world's best money managers last year???hugely. While the performance of Buffet's was negative in 2011, Wally's investment portfolio surged. If his winning streak continues, you may see Wally's name added to the Forbes list of 400 richest Americans in short order. You've probably heard of the bestseller, The ... Michigan Company 401K GPS Committed to State's Economy BRIGHTON, Mich., Jan. 19, 2012 /PRNewswire/ -- The online 401k management service 401KGPS.com is dedicated to improving the state of Michigan's economy. Established in the fall of 2011, the online 401k ... Study Reveals Wide Range of 401k Plan Fees BALTIMORE , Jan. 17, 2012 /PRNewswire/ -- The average total plan cost for a small retirement plan (100 participants) is 1.30%, while the average total plan cost for a large retirement plan (1,000 participants) ...
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Home Equity Loan vs. 401(K) Loan –Which should you choose?
Author: Charles Essmeier
You've finally decided to add that patio you've always wanted to your home. Now you can enjoy barbecue outdoors and get a little fresh air every now and again. But how are you going to pay for it? If you're like most people, you don't have cash for home repairs just lying around the house. You'll have to borrow. So where should you go to borrow? Mortgage rates are low these days, so a home equity loan would be pretty affordable, as would a home equity line of credit (HELOC) if you have a number of remodeling projects in mind.
Then it occurs to you -- "What about my 401(K) money? I can get good terms on a 401(K) loan and borrow the money from myself!" That seems like a good idea. You can borrow the money from yourself and pay yourself back with interest! What could be better than that?.
On the surface, borrowing from your retirement savings may seem like a better idea than taking out a home equity loan. The terms are good either way, and the interest rates are probably comparable. So, why not borrow from your 401(K) account?.
There are several reasons why it may not be desirable to borrow from your retirement account:.
Most Americans fail to save enough for retirement, so borrowing from your retirement fund may leave you short later should you default. No one wants to be broke when they retire.
If you have a diversified 401(K) account, you will probably be earning interest on your retirement money. In fact, the interest rate you are earning on your retirement fund may exceed the interest rate you would pay for a home equity loan. In that case, you take out a home equity loan, leave the retirement money where it is, and you should earn a net gain between the two.
If your retirement fund is earning good interest, and in the late 1990's many were earning upwards of 20% per year, then borrowing on your principal could hurt you tremendously in the long run. Due to the nature of compounding, the amount you lose by borrowing from your retirement account could be far more than simply the sum of the loan amount plus interest.
The interest on a home equity loan is tax deductible, up to $100,000. The interest on a 401(K) loan is not.
There are certainly some circumstances where you might benefit from borrowing from retirement funds instead of taking out a second mortgage, but those situations are fairly rare. A substantially higher interest rate on the home equity loan than the 401(K) loan would be one such example. If in doubt, you should consult with a financial planner.
About the Author
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing. Established in 1978, Retro Marketing is a firm devoted to informational Websites, including http://www.HomeEquityHelp.net/ and http://www.End-Your-Debt.com/
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A Quick Note
From The Publisher...
If you like the article above, you may be
interested in the following article which is also related to 401k Plans...
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"Solo" 401(k) Plans Offer Big Tax Deductions: Tax-Deferred Investing to the Max |
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Major changes to the tax laws now allow small business owners to establish 401(k) plans more easily than ever before, and benefit from bigger 401(k) plan deductions than they've ever seen. These 401(k) plans have been dubbed "solo" 401(k) plans because of the new rules' popularity among single-owner businesses. Yet, it is possible to have more than one owner and maintain a "solo" 401(k) plan, as noted below. To obtain the benefits for the 2003 tax year, however, you must act before December 31st. (For more about the types of investment services our investment affiliates offer, please visit http://www.marcjlane.com/decisiontree.htm) In contrast, SEP IRAs can be established at the same time your individual income tax return is filed (i.e., April 15 of the following tax year). This report highlights some of the significant benefits of a solo 401(k) plan. A solo 401(k) plan allows a small business owner and his or her family to defer and invest tax-deductible (pre-tax) retirement... |
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