What Happens When You Use 401(K) to Augment College Funding Solutions?


Most parents have savings and investments to pay their children’s college cost. Those who have not prepared enough, however, may find the need to tap their retirement accounts, such as their 401(K). If you’re contemplating on loaning from your 401 (K) to augment your college funding solutions, here are some things you should be aware of.

It significantly reduces your overall retirement funds. Borrowing from your account limits the growth of your earnings. For instance, if you take out a $25,000 loan, that amount won’t be earning any interest all throughout the loaning period. Therefore, you lose not only the gains from the accruing interest but also from compounding and tax deferral.
http://collegefundingfreedom.com/what-happens-when-you-use-401k-to-augment-college-funding-solutions/

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s