3 Reasons a 401(k) Loan Is a Terrible Idea

When you need cash in a pinch, it can be tempting to tap your retirement savings. After all, that money is already yours. Raiding your retirement plan means you avoid the hassle of applying for a loan elsewhere -- and possibly getting rejected.

Now if you're housing your retirement savings in an IRA, borrowing from it is basically off the table. (There's a loophole, but you really shouldn't use it.) Most 401(k) plans, though, do let you take out a loan against your balance. But while that might seem like a good solution to whatever financial issue you're grappling with, you should know that taking out a 401(k) loan is a move that could backfire in a big way.

Here are three reasons why you're better off avoiding a 401(k) loan.

Source Fool.com