If you have an established 401(k) plan and need to access your money, you can use a 401(k) loan to maintain your 澳洲幸运5官方开奖结果体彩网:tax advantages. These loans can p🌜rovide lower inte⭕rest rates than you may find with other types of loans.

Like with any loan, you must repay a 401(k) loan over a set period🔜 of time and according to the loan terms.

What Is a 401(k) Loan?

With a 澳洲幸运5官方开奖结果体彩网:401(k) loan, you borrow money from your employer-sponsored retirement plan and maintain your tax benefits when you repay the lo🐭an.

A 401(k) is a 澳洲幸运5官方开奖结果体彩网:defined-benefit retirement plan offered through your employer, allowing you to contribute funds to a plan each paycheck. With a traditional 401(k), 澳洲幸运5官方开奖结果体彩ꦓ网:contributions are made before taxes, lowering taxable income. Some plans have added 澳洲幸运5官方开奖结果体彩网:Roth 401(k) versions as well. With a Roth plan, 澳洲幸运5官方开奖结果体彩网:contributions are taxed upfront, but withdrawals in your retirement years a🎀re not, as long as you've had the account🐬 for at least five years.

In total, you can contribute up to $23,500 in 2025 ($23,000 in 2024), or $31,000 if you’re age 50 or older ($30,500 in 2024).

By borrowing from that 401(k), employees have an easy way to get a loan without a 澳洲幸运5官方开奖结果体彩网:credit check or expensive 澳洲幸运5官方开奖结果体彩网:closing costs. Most employees c♉an apply for a 401(k) loan online from their plan 💙administrator, and money will be deposited directly into their checking account within a few days.

401(k) loans accrue interest, which is typically a few points above the prime 澳洲幸运5官方开奖结果体彩网:interest rate. But that interest is paid back into your account, so you don’t lose it to a lender.

Paying Back a 401(k) Loan

You can quickly get your payout from a 401(k) loan, and then you typically have up to five years to repay your loan. If you’re using the loan to pay for a house, you may have longer than five years to repay it. The Internal Revenue Service (IRS) stipulates that payments must be made at least quarterly, although many set up monthly or bimonthly payment plans.

Most employees set up automatic 澳洲幸运5官方开奖结果体彩网:payroll deductions to repay their 🍸loans and pause contributions until the loan is reಞpaid.

Automatic payroll withdrawals make it easy to stay on target for your loan repayment, but you may be motivated to pay off your loan earlier and return to active investing. There are no prepayment penalties with a 401(k) loan, so you can pay more than your agreed-upon rate to pay off the loan early. Or you can make a lump-sum payment to satisfy the loan early.

If you lose or leave your job, you may have to 澳洲幸运5官方开奖结果体彩网:pay back the loan sooner than the loa🅷n t⛄erm. Your loan documents should establish a grace period for how long you have to repay the loan if you are no longer receiving a paycheck from your employer.

If you can’t pay your loan back within the stated amount of time, the loan may be considered a withdrawal from your 401(k)—and could be subject to 澳洲幸运5官方开奖结果体彩网:early withdrawal penalties and income tax.

The Bottom Line

When you need cash, a 401(k) loan can offer a quick and flexible solution with competitive rates. In fact, the interest that you’re paying ultimately goes to you. Before 澳洲幸运5官方开奖结果体彩网:taking out a 401(k) loan, work with your benefits manager to establish a plan that works for your budget. And if you change jobs, have a plan to pay the loan back quickly, or you’ll risk additional tax penalties.