Borrowing From Your 401(K) Can Be a Bad Idea. Heres Why.

Borrowing From Your 401(K) Can Be a Bad Idea. Heres Why.Credit ShutterstockProfessional Ask most financial advisors about borrowing from your 401(k), and their response will be brief and blunt Dont do it.Those three words sum up the prevailing sentiment on the subject. Still, the dire warnings dont scare everyone from tapping into their nest egg.According to Forbes, roughly 40 percent of individuals with a 401(k) borrow against their plans at some point. If youre considering taking out a loan against your plan, know the basics first.Editors musikelende Looking for an employee retirement plan for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.Are you eligible for a loan?That answer depends on your employers plan. Employers are not required to allow loans against retirement savings. Some plans dont while some allow multiple loans. Most, though, have a minimum amount you are allowed to draw from your 401(k). Check with your plan administrator or read your summary plan description to know if a minimum applies, and, if so, what that amount is.How much money are we talking about?Minimum loan amounts vary, but the maximum is $50,000, or 50 percent of your vested balance, whichever is less. Vesting rules vary also, so check with your plans administrator.What is the cost?Opportunity costs aside (well get there in a minute), the interest rates on 401(k) loans can be very attractive compared to other borrowing options just 1 percent over the prime rate in many cases.Interested in setting up retirement options for your employees? Check out the best employee retirement plans of 2019.How long before I have to repay?Typically one to five years, unless the loan is for the purchase of a primary residence. A repayment schedule will be part of the loan agreement. For details, check your plan.Why do experts advise against a 401(k) loan?Because they believe in the value of saving for retirement, and they dont want you to fall off track. Here are the biggest reasons for keeping your hands off that nest eggYour earning potential takes a big hit.Missed growth opportunities is the primary and most obvious reason to avoid borrowing from your 401(k). Recent market volatility aside, over time, your managed investments will grow. The mora dollars you have working for you, the more you can make. Pulling money out reduces your earning potential. The closer you are to retirement, the harder it is to catch up.For the duration of your loan, you cant contribute to your 401(k). According to Charisse Mackenzie, a financial advisor and president of Saturn Wealth, most people who borrow from their 401(k) stop contributing to their plan while the loan is outstanding. In fact, many plans rule out contributions for the duration of the loan. Since your employer cant match what you dont contribute, that free money youd be getting in matching funds dries up too. Thats a double whammy that you may come to regret in the future.When you do have to repay the loan, your take-home pay is reduced. Eventually, you have to repay yourself. Most loan terms range from one to five years, and payments come from payroll deductions using after-tax dollars. This decreases your take-home pay to less than what it was before you needed the cash.Youre locked into your job during the duration of the loan. Changing or losing your job means youll have to repay the debt. While its true the Tax Cuts and Jobs Act of 2017 gave job-changers more time to come up with the funds, it didnt remove the requirement to repay the loan. Regardless of your plans wording, you have until the deadline for filing your income taxes to get that money into an IRA. If you miss the deadline, the outstanding loan amount will be considered a distribution, and youre liable not only for the taxes, but youll pay a 10 percent early withdrawal penalty (assuming youre under 59 1/2). This is called default, and according to Forbes , it happens to 10 percent of people who take out 401(k) loans.Is it worth it?Real emergencies happen, and, sometimes, dipping into your retirement savings is the least of all possible evils. Charisse Mackenzie points out three reasons a 401(k) loan might be your best option.The low interest rate could be better than anything else available. Theres typically a quick turnaround time to obtaining a loan, and, in an emergency, that can be key. Finally, and this could be the big one, theres no credit check. Since borrowing from oneself is not a loan in the traditional sense, it is not reported to credit bureaus.In the end, the decision is yours. Weigh your needs, check your other options, and make sure you understand the terms of your plan. If you take out a loan, have a plan to repay your future self as quickly as possible and get back in the savings game. Joyce Walsack Joyce Walsack has spent her career working at small businesses and knows the many challenges business owners face. She lives in the Adirondacks Mountain in upstate New York where, when shes not shoveling snow, she writes young adult fiction, enjoys boating on Lake George and hiking in the woods. 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Why Being a Remote Worker Makes Me a Better Parent

Why Being a Remote Worker Makes Me a Better Parent All Skillcrush employees spend a few hurs each month helping urcustomer rckendeckung teamanswer emails. Its a great way to learn mora about our students and about the kinds of challenges facing peoplebreaking into tech. Ive noticed theres always a common thread in the questions I answerpeople want to be happier and more fulfilled with the work theyre doing. It sounds simple enough, but during the time Ive worked for Skillcrush Ive noticed theres something unique about tech jobs, particularly those offeringremote or flexible work arrangements, when it comes to defining and achieving happiness.When people describe their dream job, they tend to mentionbetter pay, work thatscreatively or intellectually engaging, and a job that lets them integrate theirpersonal and professional lives. These first two things can be found in plenty of professions, but the third is elusive, particularly if youre on the 9-5 grind. Workers, both young and old, are seeking out flexibility in all aspects of their lives, and speaking from personal experience, the rewards are valuable in ways that you might not expect. Beyond making it easier to run errands or schedule dentist appointments, a flexible job that lets you build your work life around your personal life ultimately makes you better at both. Sure, its hard to hit all three points on the perfect job triangle, and its easy to settle for two out of three, but with industries like tech offering more and more opportunities for flexible work, why should settling be the norm?In my past work experiences, personal welches almost a dirty yep indicative of frivolous drama that welches strongly discouraged from seeping into the office. But employees are people, and its totally logical that a healthy personal life is an essential part of a successful professional one. What makes a healthy personal life, though? Part of happiness is having time to take care of yourself, and the space to cultivat e relationships with friends, partners, or families, but theres another component of personal life thats often overlooked, one thatin my own liferemote work helps make possible.Seven years ago my oldest daughter started school. At the time I welches five years into my life as astay-at-home parentand school welches a big transition for us. My wife and I had both had a lot of negative experiences during our own school years, and we wanted to be supportive advocates for our daughter whenever possiblethe problem was, we just werent sure how to build that lifestyle. Since I was at home, I was able to answer the call when our Kindergarten teacher asked for classroom volunteers, and this ended up being our entry point into the world of parent volunteering. For the first three years of our oldest daughters schooling I volunteered at least a couple times a week in her classroom, and I did the same thing when my youngest went enrolled a few years later. Parent volunteering wasnt something I h ad any background in or ever expected to be doing, but my role evolved naturally, and before long I found myself developing lasting relationships with both of my kids cohorts. I helped with art projects, facilitated reading groups, chaperoned field trips, and pretended to know how to do addition and subtraction. And sometimesmy most favorite timesId just end up sitting around with a group of kids, talking about their days, their lives, their families, and who they were as people.When the school day was over and I was home with my own kids, I was able to keep them occupied while my wife helped with school fundraising, email communication, and event planning through the Parent Teacher Organization. My being home gave us the flexibility to make this work, and as the years went by, we realized wed added a whole new dimension to our personal liveswe were active members of a community where we made an appreciable difference in other peoples lives, while they did the same in ours. Communit y is now a hugely positive aspect of my personal life that I didnt know was missing until I embraced it.During my first year of Kindergarten volunteering, a girl in my daughters class started calling me Bob the Builder, a nickname that spread throughout the classroom and persisted over the next few years. Today, walking across campus, Ill still encounter 7th graders from that Kindergarten class calling out to me, Hey Bob, which might seem like a small thing, but for me its a reminder of how those few hours a week I spent volunteering, formed lasting bonds in my community. I dont think its a coincidence that a lot of the depression and anxiety I was prone to before having school-aged kids has melted away in the years since. Being plugged into a larger community and feeling like I was helping others in a direct way has played a big part in making me a healthier and more complete person.However, it cant be understated how fortunate I was being able to participate at the schoolmy wifes career made enough money to let me stay home with our kids and we were both on board with supporting one another to make it happen. I remember one day in a classroom when a normally chipper boy looked like hed lost his dog. I asked him what was wrong, and he said he was mad that his mom wasnt there to volunteer. I knew that his mom was a concerned and active parent, but the simple fact of the matter was she had a job that didnt allow her to get into the classroom easily during the day. And thats exactly what gave me pause as our kids got older and I started thinking aboutgoing back to work. In every scenario I played out in my mind I saw myself having to give up volunteering. If I was going to start working outside the house it would have to be during the school day while my kids were gone, meaning Id have to walk away from a part of my personal life that had become so important to me.Still, with our kids on the cusp of their teen years and new expenses like college looming in the d istance, our family needed to start generating extra income, so it seemed like Id have to make a painful choice. Fortunately I discovered the neither/nor option of remote work, and that choice never had to happen. I now work remotely part-time, Im able to generate the missing source of income wed been looking for, and I can do it all without upsetting the personal life Id established before returning to paid work. It was a solution that couldnt have come at a better time, tooright after I started working for Skillcrush my wife took a new management job with a longer commute, which meant our familys need for flexibility was at an all time high. Being able to work from homein-between my other personal prioritieswas really the only way I was able to return to work successfully, while picking up the slack at homeandsticking to my volunteer commitments.Im thankful for this luxury that remote work made possible, but really, it shouldnt be a luxury. Having the room to participate in our co mmunities through volunteering and service projects (and benefitting from the personal growth that comes with them) shouldnt be the domain of a lucky fewit should be embedded in the fabric of all our work lives. And the more I think about it, the more I realize that, by leading the way with remote work and alternative work schedules, industries like tech arent just offering a small convenience to their employees by letting them commute from their bedroom to their living room. Theyre actually opening the door for a radical reframing of what it means to work and how our work relates to the rest of our lives.If you put it under a microscope, you start to see that the conventional Monday through Friday, 9-5 officewith its rigid distinction between personal and professionalis a relic of extreme gendering, where males were assumed to be their familys breadwinner while women attended todomestic tasks. In that model, flexibility wasnt so much a non issue as it was non negotiable since roles were so strictly enforced. But as we grow past gender caricatures, as family models continue to expand and change, and as individuals take on the roles theyre best suited for, the need and desire for each of us to wear many hats increases. Remote work then is the clear path for climbing out of the limited Honey, Im home model of a previous century, and into a new paradigm where we can all live our lives in the fullest, most befitting way.And part of that fullness is community participation. Now especiallyin light of our national climate and the alienation and isolation that lurks around every cornerthere seems to be a desire to get involved in causes and institutions that can directly help others, where the results of our efforts are tangible and where we can be reminded of the ways in which we are all connected. Whether thats through volunteering at a school, participating in a community garden, being a local Big Brother or Sister, or any other opportunity that speaks to youthe ch ances to reach out and engage are all around us, but for people with rigid work schedules its just so much harder to get involved.Remote jobs give people the freedom to fit a few hours here or there into their daily schedule, making it possible to incorporate community involvement into the natural rhythm of the week. But that doesnt mean remote workers arent also committed to their paid work. Working remotely isnt working less and its not working easier, its just working smarter. Its realizing that the artificial constraints of a physical office arent just unnecessary, theyre also inhibiting. And that we can be productive, successful professionals while living fulfilling personal lives. That in fact, each of these roles directly supports the other.This article originally appeared on Skillcrush.