An employee who is going to take out a loan to meet a financial necessity could think considering borrowing from their qualified defined contribution plan (hereafter, "qualified plan") as a potential substitute for a loan from a bank or other commercial lender.
An employee's account receives the interest paid on the plan loan, which is typically lower than the interest rate on a commercial loan. The impact of selling off certain plan assets to pay for the plan debt is something the employee must also take into account.
By "loan," what do you mean?
A loan is a type of debt that a person or other entity incurs. The lender advances the borrower a certain amount of money, typically on behalf of a business, financial institution, or government. The borrower accepts a specific set of terms in return, which may include any financial costs, interest, a repayment schedule, and other requirements.
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