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Updated over 7 years ago on . Most recent reply

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77
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Tim W.
  • Carlsbad, CA
25
Votes |
77
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Loan with 401k as collateral?

Tim W.
  • Carlsbad, CA
Posted
I'm looking for additional funds to finish repairs/rehab costs. I've opened a HELOC, done a cashout refinance, and opened a business credit line for the LLC already. I'm trying to be creative and find extra funds if we potentially need them. I'm a Southern California resident. I've heard of loans that use retirement accounts as collateral. I have a 401k, does anyone know of a lender who does this? Does it pose an issue that the funds borrowed are against a retirement account (are there any extra penalties or fees associated with this type of loan)? Any help/advice would appreciated. Thanks, Tim

Most Popular Reply

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3,177
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Christopher Phillips
  • Real Estate Agent
  • Garden City, NY
1,999
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3,177
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Christopher Phillips
  • Real Estate Agent
  • Garden City, NY
Replied

@Tim W.

No. That's not allowed for 401K nor for an IRA. IRS would treat it as if you did a full disbursement of your retirement fund.

You can receive a plan loan or a withdrawal (with tax and penalties depending on the reason).

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