What is the impact of borrowing from my retirement plan?
What is the impact of borrowing from my retirement plan?
Some qualified retirement plans include the option for qualifying participants to take a loan against their retirement account balance. Many people borrow from their retirement plan to pay off high-interest debt or to make a major purchase. Although the borrowing rates may be favorable, usually 1-2% above the prime rate, the impact on future retirement earnings needs to be taken into account. This calculator can help you make a more informed decision about whether a loan is the right approach for your financial situation.
During the loan repayment period, if you elect to suspend ongoing contributions to the plan, your future retirement account balance may be further impacted. This analysis does not take into account any loan initiation fees that might apply. It also does not consider the impact of taking a withdrawal from the plan for financial hardship (purchase of a primary residence, college tuition, funeral expenses, etc.). Contact your plan administrator for details on the loan and withdrawal options available to you.
This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.
