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Some plans may even have a provision that states that 100% of the loan amount must be repaid!


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Repay the Loan! And while it is good that as the person gets older, he tends to borrow less, it is not advisable to borrow from your 401k at all! If you used a 401k loan to purchase your home (or finance for a down payment on the home), you are losing the ability to double your money in 8 years average. Some plans may even have a provision that states that 100% of the loan amount must be repaid! You should borrow a 401k loan in the toughest of circumstances where you really have NO other source of funding, no family, no relatives, etc. If you borrow a 401k loan to pay off your credit card debt or to fund an exotic vacation, this money will NOT be there when you really need it in the toughest of circumstances. Compounding interest calculators state that your money will double every 8 years if you invest diligently and with discipline. Some financial advisors might tell you that borrowing from your 401k is better than using your credit cards or taking out a commercial loan with higher interest rates. Thus if you have a 401k loan, you will be stuck at your current job for as long as you do not repay the loan. By making monthly contributions to your 401k, the idea is that over the long term, your money will grow substantially and accumulate the power of compounding interest.
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