Country: United States of America State: Ohio The company I worked for had a company funded retirement plan (besides a 401k).They are going through Chapter 11 (report) and have stated the retirement funds are secure.You must also pay market interest rates, which means the rate must be comparable to what a conventional lender would charge on a similar-sized personal loan. That’s the longest repayment period the government allows—though if you prefer a shorter term, you may be able to arrange it.The only exception occurs if you’re using the money to buy a primary residence—the home where you’ll be living full time.
If you don’t repay, you’re in default, and the remaining loan balance is considered a withdrawal. And if you’re younger than 59½, you may owe the 10 percent early withdrawal penalty as well.The IRS sets certain guidelines citing a number of circumstances that may qualify as a hardship withdrawal, including: However, it is up to your employer to determine the specific criteria of a hardship withdrawal.For instance, one plan may consider a medical expense to be a hardship, but not payment of college tuition.You may be able to tap into your 401(k) plan assets during a financial emergency.But while taking a loan or a hardship withdrawal may help solve an immediate need, there can be consequences that may reduce your long-term financial security.
If you need cash, you may be tempted to borrow from your 401(k) rather than applying to a bank or other lender. And with most plans, you repay your loan through payroll deductions so you're unlikely to fall behind as long as you remain employed.