• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

National Debt Relief

National Debt Relief - A+ BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

Talk to a debt counselor toll free:

800-300-9550

Get Relief From Credit Card Debt

Medical Bills and Unsecured Loans

  • Apply Now
    • Qualifications
    • Is This Right For Me?
  • Proven Results
    • Debt Relief Benefits
    • Credit Card Debt Relief
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Login
HomeBlog BlogBorrowing From Your 401(k) And Another Way to Beat Debt
Video Transcript

Free Debt Consolidation Quote

By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
  • National Debt Relief, LLC BBB Business Review
  • McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

Borrowing From Your 401(k) And Another Way to Beat Debt

December 7, 2012 by National Debt Relief

loansIf you could ask Santa for just one Christmas gift, would it be debt relief? Many people who are having a serious problem with debt certainly would. If you’re heavily in debt, the one thing you probably want more than anything else is to become debt free in as short a time as possible. Today’s good news is that if you have a 401(k) with enough money in it, you could pay off all of your debts this week. This is because many employers will allow their employees to borrow from their 401(k) plans. There are a number of advantages to using a 401(k) to pay off debt, the biggest of which is the fact that you’re borrowing from yourself – instead of a bank or credit union.

The positives of borrowing from your 401(k)

There are some other really good reasons to borrow from your 401(k). First, since you’re borrowing from yourself there’s no credit check, and while you’ll be required to pay a competitive interest rate – you’ll be paying yourself. You will probably not have to pay an application fee and if so it will be very low.

You should be able to borrow up to $50,000 or one half of the balance in your retirement plan, whichever is less. You will probably have to start paying back the loan out of your next paycheck. This is usually done via an automatic deduction.

The downsides of borrowing from your 401(k)

There are actually very few negatives to borrowing from a 401(k) plan. You will have to pay back the loan in five years or fewer unless you’re using the money to buy a house. In this case you might take significantly longer to pay back the loan. You also need to consider that you will be forfeiting some growth in your investment. In other words, the money you borrow from your 401(k) will not be growing in value for the entire time the money is not in your plan.

The tax impact

There is definitely an impact on your taxes because when you pay back your loan you do it with post-tax dollars. This means a $100 loan repayment can reduce your take-home pay by $100. And then, worse yet, when you take the money out of your plan to retire, you will pay tax on the same money again. Finally, there is the risk of termination. If you stop working with your current employer for any reason, your entire loan will be due within 60 days. If you can’t pay back the loan during that timeframe, the money will be considered a distribution and is likely to have significant federal and state income tax consequences and early distribution penalties.

Borrow from your life insurance policy

Do you have what’s called a whole life insurance policy or one that builds cash value? If so you may be able to borrow from it to pay off your debts. The good news of borrowing from your life insurance policy is that, again, you’re borrowing from yourself. Plus you can take your own sweet time paying back the money or not pay it back at all. Of course, if you do this, your heirs won’t get whatever amount of money you borrowed from your policy as it will be subtracted from the normal pay off.

Let us provide debt relief

Another alternative for paying off debt that has been used by many American families is to let us settle your debts. We can contact your lenders and negotiate settlements, probably for much less than you actually owe. We can also provide you with an affordable payment plan that will get you out of debt in 24 to 48 months. Learn what debt settlement could do for you. Call our toll-free number today for more details. All you have to lose is all those debts.

Do you qualify for debt consolidation?

National Debt Relief
National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

Follow National Debt Relief: Facebook Twitter Instagram Linkedin

Primary Sidebar

Consolidate Your Debt!
Find out how NDR could help.
  • Get one low monthly payment
  • Avoid bankruptcy
  • Get out of debt in 24-48 months
Get Your Free evaluation
Free Debt Consolidation Quote
By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
 Trusted By Our Clients
ConsumerAffairs Reviews

Latest Blog Posts

  • How To Write The Perfect Salary Negotiation Email
  • How To Go Back to School as an Adult
  • Is It the Right Time to Ask for Raise?
  • How To Turn A Summer Gig Into A Full Time Job
  • Debt Consolidation: 7 Tips on How to Pay Debt Off
National Debt Relief, LLC BBB Business Review AFCC Top Ten Reviews Gold Top Consumer Reviews Consumers Advocate Trust Pilot
Company
  • About Us
  • Contact Us
  • Blog
  • Careers
  • Corporate
  • Privacy Policies
  • Terms Of Site
  • Disclaimer
  • Sitemap
Products
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Debt Settlement
  • Calculators
  • FAQs
Debt Resources
  • Credit Card Debt
  • Bad Credit
  • Medical Debt
  • Personal Loan Debt
  • Unemployment
  • Divorce Debt
  • Retiree Debt
  • Veteran Debt
  • Business Debt
  • Personal Finance
Follow Us
  • Facebook
  • Twitter
  • Linkedin
  • Instagram
  • Pinterest

© 2021, National Debt Relief, All Rights Reserved.

Disclaimer
Disclaimer
Disclaimer