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Chapter 17. Borrowing from Yourself > Can You Borrow? - Pg. 168

Borrowing from Yourself 168 Can You Borrow? Loans are a feature that are allowed in 401(k) plans, but just because the big guys in Washington have given it a thumbs up, your employer's 401(k) plan does not have to permit loans. Loans mean lots of paperwork for the company, and some companies just don't want the hassle and the extra work involved. So if you're thinking about borrowing, first check to see if it's allowed in your plan. Find all of that stuff that you got when you first signed on (the stuff you filed away to read someday!), or head down to the benefits or human resource department and ask them. A plan can allow loans or not, depending on the employer's needs (not yours). Remember, it requires lots of paperwork and extra costs to add a loan feature to a 401(k) plan. If they do provide loans, they can put restrictions on the loans, and many companies do just that. Why? Because the money you're salting away is to be used for your retirement and not for that Hawaiian vacation you always wanted to take. And your employer may take the Big Brother attitude here and feel he is protecting you from yourself (he just may be). Terms to Know Highly compensated employees (HCE) are the ones being paid in excess of $85,000 (this amount may be