Reply to If you took money out of your TSP for a downpayment on a house....

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Let's say you took 50k out for a down payment at 30.

50k compounded at 7% until age 65 is [b]$533,829[/b].  That's the real cost of a 401k loan.  [/quote]

But that 50k is paid off in just a few years. It’s not taken out permanently.[/quote]

[b]Most people are repaying their 401k loan in lieu of current year contributions[/b], so it's still likely a net -50k gap in the account.[/quote]

why do you assume they are no longer contributing?  I'm confused.[/quote]

Because if they had all this money to contribute their normal yearly amount AND pay off a huge 401k loan, they would have had the means to save for a real down payment in the first place.  But they didn't...[/quote]

Poor assumption here. Most people continue to contribute to at least get the match. The TSP loan is in addition to those contributions. People opt for this route because its one of the better deals on the market for borrowing large lump sums. Personal loans are above 7-8% at even the best credit unions. Their net pay decreases as a result of loan until repaid.[/quote]

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