If you are no longer interested in performing in your company’s 401k plan because it is not performing as well as you had hoped or you are looking for more investment options, then you may want to consider a rollover 401k into an IRA account. Most employee 401k plans are limited in their investment options and so if you are looking for a little more freedom in your investing, then a 401k rollover to an IRA may be what you are looking for.
However, one nice benefit though to having a 401k plan with your employer is the ability to easily borrow money from your 401k plan. If life decides to throw you a curve ball and you need to get your hands on some of your retirement money, then you can just take a loan against your 401k. It is certainly a nice option to have.
An important thing to keep in mind though is that borrowing from your 401k does not come without rules. If you decide to take a loan you will need to pay it back otherwise you will be hit with penalties. They may see this as an early withdrawal instead of just a loan. As per the definition of a loan, you have to work out a repayment schedule.
If you are looking to take a loan against your 401k then you will want to get in touch with he administrator of the account. There is usually a set minimum that you can borrow and this is in place to stop people from taking loans often. The minimum is usually around $1000 and so you want to make sure that this is something you will be able to pay back. Often times they take the payment automatically out of your pay check.
You want to try and avoid borrowing against your 401k as much as possible but sometimes you just have no choice. Most companies make the process pretty simple by only requiring you to fill out a few forms and most times they don’t even ask you what your using the money for. This is nice because you don’t always want to dish your personal reasons to your employer.