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Chapter 8. 401(k) and Other Retirement Plan Loans

Chapter 8. 401(k) and Other Retirement Plan Loans

It sounds like a great deal: Borrow from your retirement fund and pay back yourself instead of a bank. You get a great interest rate, and the loan doesn't show up on your credit report or affect your credit score.

Plenty of people take the bait. About one in five participants in large-company 401(k) plans has a loan outstanding, according to research firm Hewitt Associates. The average loan balance at the end of 2003, according to the Investment Company Institute, was $6,839.


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