Borrowing From a 401(k)

Will Borrowing Crack Your Nest Egg?

Many 401(k) plans allow you to borrow from your account balance, letting you repay the loan through automatic, after-tax payroll deductions. Borrowing from your 401(k) plan has certain advantages, but it also poses drawbacks--loan balances must be paid off in five years and if you leave your job, you may be required to pay back the full balance within a short-time frame or pay penalties and taxes. Most important, borrowing from your 401(k) can significantly reduce your retirement savings nest egg.

To find out how much borrowing might cost you if you reduce your contributions and settle for potentially lower returns, answer the following questions and then select Submit.

These calculations are based in part on input provided by the plan sponsor and/or plan participant. Newport Group and its affiliates are not responsible for the accuracy or appropriatness of such input for any particular plan or for any plan participant's financial circumstances. Different investments involve different levels of risk and every investor has their own comfort level with risk. Investors should consult with their financial advisor to determine their personal risk tolerances and what level of portfolio risk may be appropriate for their circumstances before making investment decisions.

These calculations are not intended to be considered as investment, tax, or legal advice. The laws and regulations governing these matters are complex and subject to change. Please consult your investment, tax, and legal advisors for information and guidance that is specific to your plan and your financial circumstances before making investment decisions.

© 2016 DST Systems, Inc.