Moneta Group

High unemployment, rising credit card debt, restrictive lending and a sluggish economy have many people looking for a quick cash option.  A research study authored by Brigitte C. Madrian, John Beshears, James J. Choi and David Laibson, “The Availability and Utilization of Plan Loans,” (HKS Faculty Research Working Paper Series RWP11-023, June 2011) reveals that loan provisions are included in 90 percent of 401(k) plans. 

Additionally, more than 1 in 5 participants have taken loans from their plans at one time or another and, over a 7-year period from 2002 to 2008, almost half of all participants borrowed from their plans. Based on this surprisingly high use of 401(k) plan loans, an obvious question arises: Is this really a good idea?  As with all financial decisions, individual needs and circumstances must be considered. But certainly there are important considerations anyone should understand before taking a loan from a 401(k) plan.

401(k) Withdrawals During Employment

Recently, a client sent me an e-mail expressing concern regarding an article that discussed the dramatic increase in 401(k) hardship distributions resulting from the recent economic downturn (http://www.msnbc.msn.com/id/38783832).

Whether you are an employee (plan participant) or a business owner (plan sponsor), you have probably heard something about a Roth 401(k). In August, 2006, President Bush signed the Pension Protection Act of 2006 into law, making the Roth 401(k) permanent, and removing the December 31, 2010 expiration date that was previously in force.