What rules apply to Retirement Plan Loans?
Every 401k plan could have different rules for taking loans. Some plans allow loans while others do not. If your plan allows for loans the loan specifications will be stated in the plan document. Within the set of plans that allow loans, some plans allow only 1 loan per person while others allow for multiple loans. You will pay your loan back to your 401k account with after-tax money at an interest rate that is usually related to the prime rate.
Department of Labor regulations allow for a maximum loan amount of the lesser of $50,000 or 50% of your vested account balance, less the greatest outstanding previous loan balance (if any) in the past 12 months. There is a one-time $175.00 Loan Initiation fee when applying for a 401(k) Loan.