401(k) Loans

One way to withdraw money from your last resort piggy bank, aka the 401(k), without paying early withdrawal taxes and penalties, is to take a 401(k) loan. “Using a 401(k) is not a bad idea, if you’re taking a loan against it and you’re essentially paying yourself back,” said Dave Desmarais, a certified public accountant and member of the American Institute of CPAs.

The previous rules limited the loan to 50% of your balance but the coronavirus-related loan option allows you up to 100% of your vested balance or a maximum of $100,000. Don’t forget that this money is out of your account, but you still have to pay it back, so don’t take this decision lightly. It’s best to check with a financial advisor as well as with your employer about possible restrictions and future taxes.

More advice: 25 Tips to Boost Your 401(K) Now!