How to Borrow Money From a 401(k)

Video Transcript

"My name is Philip Beningoso, I'm an investment professional, and I'm going to be discussing, how to borrow money from your 401K. Now, as your career progresses, you may need to take money from a 401K to cover some unavoidable expenses. You might need to purchase a house, or pay some advanced education, or keep expenses, medical bills at bay. The limitations of 401K lending for the average consumer means, you need to observe federal law, and avoid excessive penalties. Let me take you through a few quick steps that can make this process easier for you. Step 1, is to take out a loan of up to half your total principal in order to payoff important financial obligations. The federal government caps that cumulative amount of loan in a given year to 50 thousand per account; 2, establish a budget that helps you pay back the money you borrowed from the 401K account; 3, read through your 401K plans fine print, to determine whether there's a minimum loan level for each transaction. Now some 401K providers require a minimum amount to be borrowed from; step 4, search your 401K's information to assess restrictions on the number of loans and transactions you can take from your account; 6, is to maintain steady employment as you borrow 401K funds, to avoid withdraw fees and penalties; and 7, plan your monthly budget accordingly to the repayment amounts taken from each paycheck. The information provided here, is for informational purposes only, and should not be considered an individualized recommendation or personalized investment advice. Any investments or strategies mentioned here may not be suitable for everyone. My name is Philip Beningoso, and I'm an investment professional."