Anne Tergesen

speaker

4,485 appearances 83 recordings 1 series first heard Jul 2017 last heard Feb 2025

Anne Tergesen’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Is It OK to Tap Your 401(k) for Quick Cash? · 13 Mar 2024 podcast

So that money comes out permanently. matched

So that is a real downside of these hardship withdrawals. matched

People really shouldn't take them unless they absolutely need the money. matched

So if you want to tap into your 401k, another way to do so is to take a 401k loan. matched

A lot of plans allow this. matched

It's a way that people can borrow exactly what it sounds like. matched

You can borrow against your 401k. matched

And the benefit of a loan versus a hardship distribution is that with a hardship distribution, you're really cashing that money out. matched

You're matched

Paying income tax, you're paying potentially a 10 percent penalty if you're younger than 59 and a half. matched

With a loan, you're taking that money out, but you're going to repay yourself with interest. matched

So for a lot of people, that's an attractive alternative. matched

There are downsides to loans as well. matched

So it's something that people need to consider. matched

Under the law, it says that people can take out what they need to meet the hardship. matched

It's sort of on the honor system a bit, but some employers require people to actually submit proof of a hardship, you know, maybe in the form of an eviction notice. matched

Other employers allow their workers to kind of what they call self-certify the hardship, which means I come to the employer and say, I'm experiencing this hardship, but they don't require me to submit the documentation. matched

So with a loan, the law says participants can borrow up to half of their balance or $50,000, whichever is lower. matched

Some employers allow people to take out more than one loan at once. matched

Other employers cap it. matched

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