401K Loans Interest Question (1 Viewer)

[jrdbrn]

I was told two different things by two different HR ladies. Our old and our new. One obviously doesn't know what they're talking about.

If I take a loan against my 401k.. a small $2500 loan and interest is 6%, who get's that 6% interest? I was initially told the interest goes back into my 401k, but recently told Securian would get the 6%.

 

[JuJuNola]

I'm with Vanguard and I know that the interest from a loan goes straight back to your 401k. Have you tried giving your 401k provider a call to get to right answer? If not, that would be my suggestion.

I know our HR lady is completely useless. I almost got screwed when I went on maternity leave because she gave me the wrong information. I finally just decided to call UNUM directly. And when I returned to work she forgot to put me back in the system, even though I sent all necessary paperwork, so I didn't get paid.

You know the "stuff" got real!!

 

[gwballin]

I was told two different things by two different HR ladies. Our old and our new. One obviously doesn't know what they're talking about.

If I take a loan against my 401k.. a small $2500 loan and interest is 6%, who get's that 6% interest? I was initially told the interest goes back into my 401k, but recently told Securian would get the 6%.

Instead of investing in the market for example, the 401(k) is investing in bebt, your bebt, and as such the interest earned from you goes back into your 401(k) no different than if the 401(k) invested in a CD, bond, etc.

Put another way, it is not Securian's money so they don't earn the interest.

 

[BIG E]

Interest goes back in your account. There usually is a loan fee that you have to eat with my 401k it's $75.
I'll give you the same advice I give my employees. If you do make a loan, continue to put in your percentage on top of the loan repayment. If you don't your losing out on the company match.

 

[jrdbrn]

Interest goes back in your account. There usually is a loan fee that you have to eat with my 401k it's $75.
I'll give you the same advice I give my employees. If you do make a loan, continue to put in your percentage on top of the loan repayment. If you don't your losing out on the company match.

Yea that's right with the $75. The company puts 4% regardless.

 

[JuJuNola]

Interest goes back in your account. There usually is a loan fee that you have to eat with my 401k it's $75.
I'll give you the same advice I give my employees. If you do make a loan, continue to put in your percentage on top of the loan repayment. If you don't your losing out on the company match.

That's excellent advice regarding continuing to contribute on top of loan payments.

I had to go an look up the fee for Vanguard. It looks like it's $35 if you apply via the website or on their VOICE Network and $85 if you apply over the phone with a representative. There's also a $25 annual maintenance fee.