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| *Business questions>>>Credit Questions |
does anyone know if i can use my 401k pension as collaterial to secure a loan ? |
Question: i have a 40,000 401k pension and im on a medical leave and need funds to get by pay bills, living expensces, ect my credit is toast can i use this 401k as a way to secure a loan of about 10,000 max if i can any suggestions would be helpful Answer: Federal law prohibits anyone from using a 401(k) account as collateral for a loan, except for a loan from the plan itself. Most plans allow for a loan of up 50% of your vested balance. However, unless you are being paid while on leave of absence, you may not be allowed to take a loan from the plan, because repayment must be done through payroll withholding. If this is the case for you, then a hardship withdrawal may be your only other option. Others have noted that a hardship withdrawal is taxable and subject to to additional 10% early withdrawal penalty if you are under 59 1/2. |
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