Okay, it is theoretically real but c’mon. A 401(k) loan temporarily distributes assets from your own account and, like most circulation, straight away decreases the worth of one’s account. However, if we will get technical right here, a k that is 401( loan is reallyn’t a “loan” either. At the very least maybe perhaps not within the feeling of a conventional credit tool. A 401(k) loan just moves your very own cash from a pocket to a different. Cash where fees are deferred and cash you’re able to change with interest with time. While guidelines change from plan to plan, nearly all 401(k) plans that license loans use interest costs determined at Prime speed plus 1% or 2% in the loan balance that is outstanding. With all the prime presently holding at 5.5%, meaning an profits price of 6.5% or 7.5%.