Is it ever smart to borrow from a 401k or ira?

I never ever ever ever ever suggest touching your retirement money to pay off unsecured debt. That money is what you will use to survive off of when you retire and most likely Social Security won`t be around. Plus the IRS will penalize and tax the Dejesus out of you for touching it.

I borrowed $1000 from my 401k and I wish I would have never did that. I regret to this day, I'm trying to hurry up and pay it off. Once I get that paid off I will never do it again.

Well it actually depends ... if the investment has not gained much value, and you can use the money to really improved your credit which will improve your future financial stability in future, then yes, go ahead and take the money. But if the investment has been going gangbusters and has gained a ton of value, then maybe you shouldn't touch it. My advisor gave me his blessing to cash out a Roth IRA with $1500 value that had only gained a few hundred dollars in 5 years, and that money could be used to pay down my debt, therefore making my ability to refinance my home much sooner a reality. You will get other people who agree with mobile not to touch it, but SOMETIMES it makes sense depending on the various factors. Good luck, finances can really be tricky!

In my opinion you should never touch it for a number of reasons. The first reason is if you borrow against it and then lose your job most companies immediately call the loan do in full within 30 days. That means if you borrowed 10k then you have to pay it back in full immediately. If you can't pay it back then this is where the next reason comes into play to not ever borrow from your 401k. The next reason is you will pay a huge penalty at approximately 50% of the borrowed amount to the government if the loan defaults. This means if you borrowed 10k and it defaults then that is like withdrawing 10k and you would have to pay 1/2 of that to the government in taxes and penalties. The final reason I can think of is it deterioates the earning potential of that money until it is paid back.

no its not smart to touch money you have put in a 401k or ira ever because it always comes back to hurt you in the end so just stay away from that idea.

I have a situation that needs clarification. My hours were cut back from my job and I had some health issues recently which leads me to well over $2000 in medical bills. My question is this, I have managed to save some money in a Roth IRA I do not want to touch that period. Can the hospital I owe money to come after that by law?

I am pretty sure that IRAs/401Ks are protected by law from garnishment. Although I can't quote you any specific laws on that, it is what one of my attorney's told me.

I would try not to borrow from my 401k if possible but maybe I can ask my question here. If I can manage to payback my debt I was thinking going to Berlin. The question I have now is if you know how the 401k's in Germany are structured compared to the USA. Thanks in advance for the responses.

Most IRA's except inherited Ira's as well as 401ks are exempt in Florida. If you inherited an IRA and you have a judgment against you, it can be garnished. Now, not all Ira's are exempt in all states. I just know the rules in my state. However, if you borrow against your 401k and something goes wrong, it WILL NOT BE PROTECTED from creditors. The last thing you want to do is borrow against your 401k. If you take out a loan for 10k and you have 50k in there....if something happens, you lose it all. If you don't touch it, and something goes wrong, the creditors can't take it away, unless of course, you didn't pay your taxes or something. Some things are just not exempt. I wouldn't borrow against my 401k. If you get sick, or lose your job, kiss your retirement goodbye!