Posted on 06/09/2011 9:11:06 PM PDT by TigerLikesRooster
June 9, 2011 10:49 AM
New sign of tough economy: More 401(k) loans
A significant increase in the number of people taking loans out on their 401(k) retirement plans is seen by analysts as fresh evidence of hard economic times.
One-in-seven people took out such loans last year -- up by double digits from 2009, according to the consulting group AON Hewitt.
Sheri Chaney Jones, of Columbus, Ohio, started a consulting business in October and borrowed from her 401(k) to help pay her bills.
"It was extremely easy,' she told CBS News, adding that her financial planner told her "she was seeing more and more people" do it, "because the banks were not giving loans out traditionally to small businesses anymore."
"It's not right for everyone," Jones noted, " but it is your money, you can borrow from it tax-free, you do pay yourself back at interest, but a very low interest, much lower than maybe a traditional bank."
"What I feel optimistic about," Jones says, "is that I will be able to grow this business to not only pay myself back at the current interest, but continue to contribute more toward the 401K than I would have if I would have stayed where I was."
(Excerpt) Read more at cbsnews.com ...
I’m getting convinced, it’s all about incrementally seizing your stuff...Be it property, 401, stocks manipulation, whatever. Hocking it to survive. I am confident, most those using their 401 as bank, won’t be able to return the money.
Is anybody drawing their money by age 59 & 1/2 (a requirement), paying the 20% Fed Tax, and getting the hell out of stocks and the US plunging dollar to buy something tangible, something that will hold at least some value when the dollar becomes relatively worthless in 2013?
I thought it was hard to get money out; I was told I had to be behind on my mortgage and all. When they fought me enough about it, I just stopped my contributions. While putting money away for the future is obviously a good idea, I no longer think this is the way to go (understand I have other income tax deductions, so don’t really need that aspect of it). The unreported inflation is shrinking the value of these funds even as the statements may report increases in total value, and I saw no point to continuing contributions while putting gas on a credit card.
Mine has some kind of hardship withdraw and or loan option.
You’re right though, they don’t make a whole lot of money due to inflation, even if they were to gain 6% by Magic.
..plus I just keep transferring— here and there— amounts to the cash equivalent funds, preparing for the big drop that I think is going to come.
I was surprised by how much treasury funds lost; I thought they’d perform better (not make much, but certainly not lose anything).
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