6 ways to screw up your retirement plan
Mistake No. 2: Borrowing from your plan
Your company retirement plan is not a piggy bank. Treating it like one has very expensive consequences.
"My suggestion is always to exhaust other options prior to going into your 401(k), because it's so expensive to do so. It could cost you as much as 40 cents on the dollar -- and that is money you never recover," said Glenn A. Hottin, a CFP at M&H Advisors in New Haven. That could occur if you borrow the money and then default on the loan, which results in a deemed distribution on which you would owe taxes and a penalty if you're under a certain age.