भिडियो हेर्न तलको बिज्ञापन लाइ हटाउनुहोस
 |
While most of us would rather not take money from our retirement plans until after we retire, we are sometimes left with no alternative. Luckily, most qualified plans offer employees the ability to borrow from their own retirement assets and repay that amount with interest to their own retirement account.
If you find yourself in a financial bind, you may be considering obtaining a loan to meet your immediate financial needs. The question then is should you borrow from your retirement plan or should you look into other alternatives? The answer is determined by several factors, which we will review as well as the general guidelines for plan loans.
Should You Borrow from Your Retirement Plan?
Before you decide to take a loan from your retirement account, you should consult with a financial planner, who will help you decide if this is the best option or if you would be better off obtaining a loan from a financial institution or other sources. The following are some factors that would be taken into consideration:
The Purpose of the Loan
A financial planner may think it is a good idea to use a qualified-plan loan to pay off high-interest credit-card debts, especially if the credit balances are large and the repayment amounts are significantly higher than the repayment amount for the qualified-plan loan.
The financial planner, however, may not think it makes good financial sense to use the loan to take you and your friends on a Caribbean cruise or buy a car for your child\'s sixteenth birthday.
The Cost of the Loan
The benefit of taking a loan is that the interest you repay on a qualified plan loan is repaid to your own qualified plan account instead of to a financial institution. However, make sure you compare the interest rate on the qualified plan loan to a loan from a financial institution. Which is higher? Is there a significant difference?
The downside is that assets removed from your account as a loan lose the benefit of tax-deferred growth on earnings. Also, the amounts used to repay the loan come from after-tax assets, which means you already paid taxes on these amounts. Therefore, unlike the elective-deferral contributions you may make to your 401(k) plan account, these repaid amounts are not tax deferred.
Effect of Taking the Loan
Some plans will require you to suspend 401(k) elective-deferral contributions for a certain period after you receive a loan from the plan. If this is the case with your 401(k) plan, you will want to consider the consequence of this suspended opportunity to fund your retirement account.
Qualified-Plan Loan Rules
Regulations permit qualified plans to offer loans but the plan is not required to include these provisions. To determine if the qualified plan in which you participate offers loans, check with your employer or plan administrator. You also want to find out about any loan restrictions. Some plans, for instance, allow loans only for what they define as hardship circumstances, such as the threat of being evicted from your home due to your inability to pay your rent or mortgage, or the need for medical expenses or higher-education expenses for you or a family member. Generally, these plans require you to prove that you have exhausted certain other resources. On the other hand, some plans will allow you to borrow from the plan for any reason and may not require you to disclose the purpose of the loan.
भिडियो हेर्न तलको बिज्ञापन लाइ हटाउनुहोस
|
Post a Comment