Posted by Michigan Andy on February 18, 2002 at 20:59:09:
I may be wrong, but think not. Having that 401(k) at any bank makes the bank no more secure about lending you cash on a signature loan than if you did not have it there. What’s to stop someone from getting the loan and then immediately moving the deferred comp fund anyhow? Absolutely nothing. Again, I may be wrong, but you cannot pledge the funds in a 401(k) for collateral, or security, on a loan. You can, however, borrow directly from your own fund, up to a certain percentage. I mean no offense to Tony, but $10k is not a lot to work with, depending on what he wants to do in RE. As a side note, I borrowed $4k from my 401 to buy my first 5-unit. Not quite sure if he wants to jump in with both feet like I did (ya know, lead, follow, or get the he** out of the way).
Cashing it out, placing the remaining $7800 or so (after the mandatory 22% withholding) in a CD or pledging as some other form of collateral against a working line of credit maybe a good place to start. I am not advising to cash out, just an option. By the way, the pledge against a WLOC is Ed Garcia & Terry Vaughn’s idea.
Just my 2 very small Georges.