There are many things you need to realize when you go to take a loan out from your 401k loan. The first of which is the fact that you will need to pay the loan back. This means that you will need to replace the money that you took out of the plan in the form of a payroll deduction. Not only will you need to pay the money back, which is yours to begin with, but you will also need to pay interest on the loan. This means you will need to pay back your own money and you will need to pay interest on it as well. Then there is the origination fee you will need to pay as well. This is the cost that comes out of the money you borrow for the 401k planner to create the loan. In most cases, it is $75 before you even get to see any of the money. So ask yourself if it is really worth taking out the loan before you really go and do it.
Joseph Leonard is a registered Investment Advisor in North Carolina, author of The Retirement Vault and founder and CEO of the Financial Management Company in North Carolina, Coastal Financial Associates.
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