Older Americans borrow against 401(k)s…tax hits and all

Despite potential tax and investment problems, moreinvestors have been borrowing from their 401(k) plans or takinghardship withdrawals in recent months, some retirement plan providerssay.  Many in the field expect more borrowing in 2008, asconsumers struggle with tighter credit and potentially higher mortgagepayments.  “I don’tthink it’s a groundswell but it’s enough to be noticed,” said RickMeigs, president of 401khelpcenter.com, which provides information on401(k) plans.Increased borrowing on 401(k)s could be because of the credit crunchand slumping housing prices. To be sure, the indications arepreliminary; it’s too early to say why it’s happening, according to theHartford Financial Services Group.   Borrowing against yourretirement nest egg may seem tempting but it presents a host ofproblems. It could significantly reduce your savings at retirement andcreate an expensive tax bill if you can’t repay the loan when it’s due.

Source and more:  Chicago Tribune, http://www.chicagotribune.com/business/yourmoney/chi-ym-borrowing-1014oct14,0,5181066.story