wcrile

Thanks, everyone for the helpful feedback. Sounds like the consensus is it's not a good idea. A few things to clarify from my end; 1. I'd be cutting my roth 401-k contribution from 20% of my pay to 10% (not enough to affect the employer's match) I'd still be contributing, albeit at a lower percentage. 2. The loan and 5.5% interest is me paying back myself 3. On the tax question. My roth 401-k contributions already aren't deductible, and are contributed after taxes, so I'm not so clear on the 'double taxation' comments. 4. My earnings on the 401-k have been essentially flat for the last two years, so I don't buy the 'giving up future earnings' case. Couldn't you just as easily say 'giving up future losses' depending on what the market does? Thank you all again. It's been an education for sure!

Hi, all. Here's a scenario I'd really appreciate your opinions on; I have 25,000 in my employer's roth 401 K account. I can take out a loan from this amount at 5.5% interest and pay it back over the next few years. What I'm thinking of doing is taking a loan for 10,000 dollars for 3 years, and lending it to a family member's business at 10% interest for 3 years. During this time period, I'll probably reduce my normal 401-k contribution to offset the pay roll deductions for the loan repayment so as to pay back the loan quickly over roughly a year. Does this sound like a good idea? Am I missing any risks or not thinking of something here? I know I could loose my job, and be liable for the full loan amount, but in that (unlikely I hope) scenario I have some savings that could cover the loan. Aside from that, and my family member's business defaulting on my loan, is there any reason not to do this? Oh yes, and I guess depending on what happens to the market, I could be missing out on some returns (although they've been essentially flat for the last two years anyways). The loan interest is essentially me paying myself, and if I can get 10 percent elsewhere, why not? Thanks everyone for your thoughts!