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Well what used to be a lender of last resort the 401K is now lender of choice for many Americans.
In fact one in seven of us borrow money from our 401 case last year but is this really good idea but it's now Rick -- CEO of adamant financial.
You know Rick and lots of people are dipping into their for a one -- these -- as well -- your money.
And the big need cash and they can get -- anywhere else.
Great so I think -- a loan from a bank I think -- a home equity loan to save my life.
I need emergency money I'm gonna go to my 40110.
Unfortunately you're right that's exactly what often happens and it's a really really really bad idea.
But why so that I mean I pay myself back into street pretty darn good and net.
Well it's not as simple as that sounds right adult that you made -- sound good which is what the employer and plan sponsor -- -- but it's not nearly -- to deal for personally -- paying yourself back because what's happening is when you take money out of the plan you're actually withdrawing it from the plant which means those shares -- investment -- used to -- has no longer there when you put the money back you're putting money back to get you back up where you used to big.
-- -- not made the loan you would have been that much ahead of the game and the loans seems cheap but it really isn't because you actually end up paying taxes twice.
Remember when you put money back into the plan you're putting money back -- -- has already been taxed and when you withdraw the money in retirement for real.
You get taxed again meaning you're paying taxes twice.
As a result this is extraordinarily.
I'm buying a home for the first time I have medical hardships I mean you -- -- a litany of reasons why the decision to take that money.
Ten -- it arguably acceptable.
-- you can you can justify it as much as you want -- the end of the day.
This is they retirement plan not I wanna buy a house plan -- payoff other debt plan.
Retirement you'll be really glad of that money is there and if it's been squandered on other expenses no matter how important they -- at the time you'll really regretted it retirement.
I -- and that this you know that.
The threat investment rabbits -- loss and things like that but I do think there's some -- said about the fact that you know I don't -- -- -- a roof over my families head.
And maybe add to be a little little more diligent about saving going forward but again my money I can't get a from a bank.
-- -- -- It's your money and you're putting that money -- your own retirement if you take it out now for a current expense you will not have that money for retirement and as a result big balance at retirement will be dramatically less according to some studies every 101000 dollars you borrow from your plan will represent 100000.
You don't have -- retirement.
You know two senators introduced a bill that would BN withdrawals from four -- case.
And then I've also heard talk that are there are withdrawals will actually be taxable eventually Sunday so.
What is putting its -- grimy fingers on our retirement plans aren't -- You know that I'm must -- I agree with the idea of prohibiting loans I would rather discouraged them through education but at the end of the day as you pointed out it is your money and if you wanna that you really should be able to get it.
There have to be at least one moment in life that you can admit.
He's a good time to -- in.
If you -- in such dire straits then yes we can argue about for example medical expenses wouldn't qualify the money your retirement plan is one of the last refuges.
To protect you from creditors if you all the money now.
And you get sued or fallen to bankruptcy.
That money would be gone but for a one -- are protected from bankruptcy they're protected from creditors so I'm really hard pressed to suggest.
That -- a really good excuse for pulling money out prior retirement.
Well Ric -- CEO of -- financial I appreciate your thoughts but I will tell you that it became between losing my house and keeping a roof over my children's -- Going right to -- -- thank you -- -- --
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