When dire financial need strikes, employees often tap their retirement accounts. While there are cases in which a 401(k) withdrawal makes sense, these loans should be viewed as an absolute last resort.

There are significant downsides related to 401(k) loans such as including penalties, administration and maintenance fees as well as “leakage” from retirement accounts. This occurs when an employee takes a loan on their 401(k), cashes out entirely or leaves their job and rolls over their account to their new employer.

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