The only reason I have a 401k is to pull from it for investing...

[Nye Eddings]

Hi BP!

Most companies provide their employees 401k plans or Roth accounts.  There are options for employees to be able to take personal loans (up to 50% of the vested amount twice a year), loan for primary residence and college education (I think). The loans work similar to  basic loans.  You take out lump sum, you pay interest according to life of loan and payments are made by deductions from your pay check. The plus about using the 401k is the matching aspect.  Employers match a certain amount which would allow you to save more than just saving cash on the side. There is a lot of talk about how employees (as investors) should avoid it because you are pulling from before tax dollars and paying it back with after tax dollars. Is it really a big deal? Wouldn't the return from a buy and hold be worth more than the average 4% return in a 401k? (Assuming that you can make at least $400 a month in profit off of it)

I am looking for someone who may have done this...or someone who pulled from the 401k indefinitely. How did it workout?

*also interest paid on loan is deposited into the 401k account.*

Thanks in advanced

[Mindy Jensen]

@Nye Eddings, we have taken loans from my husband's 401(k) several times. There are risks, to be sure. But in life, there are risks.

One of the biggest is that if you stop working at that company, you have a short time to repay the loan in full, or you pay early withdrawal fees and taxes. 

I believe the limit for the loan is 50% OR $50,000, whichever is lower. 

I've never had a problem, but my husband works for the Federal Government, and they aren't closing up shop anytime soon. He has a very secure job. 

Another way to look at it is you're going to get a loan anyway. Do you want to pay the bank interest, or do you want to pay yourself interest?