Newspaper article St Louis Post-Dispatch (MO)

Don't Mess with Your 401(k), You'll Lose in the Long Run

Newspaper article St Louis Post-Dispatch (MO)

Don't Mess with Your 401(k), You'll Lose in the Long Run

Article excerpt

Q. I wanted to borrow money from my 401(k) for some home improvements, but I work for a company that doesn't allow that.

Is there any way I can talk my company into it, or force my company into it?

Homer A. You can whine, wheedle, beg and nag, but you can't force your company to give you a loan from your 401(k). Nationally, 80 percent of such plans offer loans, but there's nothing that says they have to. It depends on how the boss set up the 401(k) plan. "Either it has a loan provision, or it doesn't," said benefit consultant Gary Flotron. However, the boss can change the plan to allow loans. That's where some employee nagging may come in handy. If I were your boss, I'd say, "Bah, Humbug! No loans for you. Back to your shovel in the salt mines, Homer, and don't darken my plush office carpeting again!" Social Security is barely enough to keep retirees in dog food, much less condos in St. Pete. You'll need your 401(k) in your old age. If you borrow it and spend it now, you'll kick yourself later. So, your boss may feel she's doing workers a favor by keeping their paws out of the retirement kitty. Of course, it may also be that she's too cheap to do the loan paperwork. But if you really get in a pickle, you may find that your plan allows "hardship withdrawals." Nine out of 10 plans do. You often can get a hardship withdrawal to fund a first home - or save it from foreclosure - for college expenses or for medical bills, Flotron said. The bummer here is that you'll have to pay taxes on what you take out. You'll also pay a 10 percent early withdrawal penalty if you're under 59 1/2 years old. There's an exception to the penalty for money withdrawn to pay some deductible medical expenses. Q. I've changed jobs in the past two years and I have money left in the 401(k). I'd like to roll the money over into IRAs and have been procrastinating about actually doing it. …

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