Can you borrow from your 401k for college

Traditional 401k withdrawals are subject to taxation at your ordinary income tax rate. When your children are in college, you are likely in your peak earning years and in a higher tax bracket than you will be in during retirement. If you are not yet 59 ½ years old, 401k withdrawals are also subject to a 10% early withdrawal penalty.

Specifically, there are two ways you might be able to use your 401 (k) funds to pay for college without penalty. First, unlike an IRA, you can usually …

Pros and Cons: Borrowing From My 401K to Pay for …

Official Site: https://www.edvisors.com/plan-for-college/paying-for-college/401k-loans/

Arguments Against Borrowing From a 401k. A 401k loan is a short-term loan, which must be repaid in 5 years. A 401k loan is best for short-term cash flow needs, not long-term debt. This makes it less suitable for financing a college education. If the employee loses his or her job, the 401k loan must be repaid in full within 60 days of the job …

401 (k) Loans Reduce Your 401 (k) Earnings. If you borrow from your 401 (k), you limit the potential growth of your retirement assets. For example, if you take out a loan for $10,000 from your 401 (k), that $10,000 won’t be earning any interest for you during the life of the loan. And you’ll lose not only the accruing interest amount, but …

People Also Searches can you borrow from your 401k for college

How to Pay for College: Borrowing from Your 401k (What you need to know) Video Answer

Leave a Comment

Your email address will not be published.

Scroll to Top