Can you borrow again from your 401k?

Question

My husband borrowed from his 401k 3 years ago. He borrowed half and has been paying it back monthly from his paycheck. He still has about 2 years to pay it off. Can we borrow from it again since he is still paying on the previous loan?? We need the money for a down payment.

Answer 1

I dont know if yours might be different but with our 401k you cannot have two loans out at the same time...you CAN however get what they call a hardship loan. This is only available for things like a down payment on a house, education, medical bills, ect. It is different from a loan because you cannot pay it back, it is just a straight withdrawl and it is taxed when you take it out. We also had a loan with our 401k and we could not get another one until it was paid off but we were able to get the hardship withdrawl for our down payment of our home. Hope this helps!

Answer 2

Every plan is a little different, and loans against your 401(k) generally have to be approved, so there is no guarantee your request will be granted. My company has a provision where you can make a hardship withdrawal that doesn't have to be repaid. His HR rep should be able to give you more information.

I've gotta say, though, taking a loan out against your 401(k) is almost always a bad idea. The whole point of having a 401(k) is that it lets you invest pre-tax dollars, meaning you can save more and feel the crunch less. If you take a loan on it, though, you get totally screwed, because you have to pay taxes on it TWICE- once when you pay it back with post-tax dollars, and again when you take it out in retirement! Your money is also losing the ability to grow while you have it out of the account, so you are basically robbing yourself.

I don't want to discourage you from buying a home, but you should always think really hard before touching your 401(k) balance.

Answer 3

Depends on the plan. If he's paid down enough on the first loan then in some cases, yes, they will let you take out a second loan although not for as much as the first one. I've personally done this before. He would need to contact the plan provider or his HR contact to find out the details.

In reference to the above answer, ANY loan against your 401K technically is a "hardship" loan. They don't let you just withdraw the money for the heck of it. But let's face it, people do lie a little when stating the reason for the loan if they really need the cash and it's all that's available to them.

As for WITHDRAWALS, yes, you can early withdraw on your 401K, you don't pay it back BUT in addition to the taxes that they take out of it initially, you'll want to set aside at least an additional 20% of the money until after you've filed your taxes for the year because, depending on the amount of the withdrawal, you may owe MORE taxes on it. I wouldn't recommend early withdrawal. I did it six years ago and am STILL paying back taxes on it and have not seen a tax refund in as many years because the IRS keeps it.

Answer 4

i was ready to say yes until i read the second loan -- check with hr -- as far the down payment if it is for a home you might be able to take out a hardship loan remember that one you will not pay back and you will have to pay taxes on it this tax year == also keep in the front of your mind you are fooling with you retirement money!!!!

Answer 5

Each 401k plan is different but all of the ones that I have seen allow you to only have one loan at a time.

Answer 6

You can always, try and see. That is one sure, way to find out for sure. Have a good evening and a Happy Labor Day.

Answer 7

you have a lot of manRecipient Mandy Re: what is that suppose to mean? LO ITS A PLAY ON YOUR NAME. LIKE MAN AND DY DY MEANS A LOT AND MAN EQUALS MAN

OLD LADY. you dummy