Is It Better to Take a Loan from My 401(k) Instead?
Taking a loan from your 401(k) can be an alternative to a hardship withdrawal. Loans from 401(k) plans are not subject to the 10% early withdrawal penalty, and you repay the amount borrowed back into your account with interest. The downside is that if you leave your job, the loan may need to be repaid in full within a short timeframe, typically 60 days, to avoid it being treated as a distribution.
