5 Questions to Ask Before you borrow from your 401(k): Make sure you understand the consequences*
Is it a short-term need? Generally, your 401(k) should be the last place to go for money. Consider using your 401(k)-retirement savings for a short-term 'bridge' loan when the money can be repaid in a short time, such as closing on your new house before selling your old house.
Is my job secure? In many situations, if you take out a 401(k) loan and then lose your job, you’ll be required to pay back the loan in full within a specified time frame, often 60 days. If you don't have the ability to do that, the loan will be considered an early distribution, and you'll owe taxes and penalties on it.
Am I using the money to buy an appreciable asset? In other words, are you putting your investment money into another investment? "The loan is more justifiable for appreciable assets, such as a home purchase.
Am I hoping to use the money to pay college tuition? Know that there are a variety of other ways to borrow for school that won't directly impact your retirement funds.
Do I have other options? Make sure you look at all the other options available to you before you borrow from your 401(k), your 401(k) should be the last place to go for money.