Borrow from 401K for IVF? (ticker warning)

NYBrideInWI

Has anyone borrowed from their 401K to pay for ivf? How does that work? I know there is the cost of lost time not in the market to be considered, but are there other fees?  One of my coworkers once told me that the interest you pay on the loan you are paying to yourself (it goes into your 401K account) - I don't know if that's true.

Thanks for any input!  

We just met with a new RE today and IVF is our only option (or adoption) so now DH and I have to figure out how we want to pay for it. We have some cash savings available, but are trying to figure out if we'd be better off keeping savings and financing the IVF. One IVF wouldn't deplete our cash but multiple IVFs would.

We are TTC #2, I am 31, have high FSH (14.5) and DH mysteriously and suddenly has no sperm (at canceled IUI had 20 dead sperm). September SA was normal.

reb259

In my opinion I would not use your 401K if you don't have to.  If you can pay cash I would especially if it won't deplete your savings.  It is better to pay yourself back than a bank.

Good luck!!

njohnson1972

If you take a loan out, you do pay yourself back in interest for the loan.  But that doesn't make up for what you could potentially have made by being invested.

Not that I necessarily recommend this, but you may also be able to take a medical hardship from your 401k and avoid paying penalties on an early withdrawal.

Also remember that all medical expenses greater than 7.5% of your AGI can be a deduction if you itemize.  So, if you make $100,000, medical expenses over $7,500 would be a deduction.  Just something to keep in the back of your mind as you try to plan this out. 

Good luck! 

apaige25

I would not borrow from your 401K.  Either try to get a loan or a 0% interest credit card.  I found a credit card with citi cards that is offering 0% on balance transfers for 24 months.  The transfer has to be made by the end of April.

daisies916

My friend did something like this. I'm not sure of the details, but I'll see if I can page her on FB. She may have some info for you.

FWIW- she is very financially savvy. I'm not sure exactly what they did, but they would not have done anything that would have put them in any sort of financial hardship.

Good luck!! 

DeputiesWife

I would highly advise against it for a number of reasons.

1. you will be penalized for withdrawing early.

2. you will have to pay taxes on it as in close to half of what you borrow.

3. your 401(k) is for when you retire. Planning for the future is very important, especially with children.

you are better off using your savings or financing it.

Good luck.

pattiwagon

My husband looked into it but I didn't really want to do.  So I called my credit card and got 0% for 12 months.  We knew we would be getting a large tax refund-(medical expenses over 7.5% of your income is deductible don't forget!) and my hubby would be getting a nice bonus so we were confident that it would be paid off before the 12 months.  If you absolutely have to use your 401k borrow don't withdrawal. 

OrangeSmoke

I think the question here is - how many kids do you want?

I don't know anything about borrowing from your 401k, but if you only want 1 or even 2 more kids, this might be a moot point.  I would pay for 1 round of IVF using the cash you have and see where you go from there.  For all you know, you could be successful on your first try (a lot of people are!).

 

jcath

I did it and I did not pay any fees for an early withdrawal.  Most plans offer a hardship withdrawal plans and medical expenses including IVF quality if you are spending more than 7.5% of your AGI.  Also the tax deduction seems to offset the taxes you would need to pay on the withdrawal.

sweetky_06

It is true that when you borrow from your 401(k) you do pay yourself back the interest, but you obviously lose the growth that would have happened on that money while it was in the 401(k)

You do not pay a penalty for a loan. But. . .when you leave the job associated with your 401(k) you took the loan out on, whether voluntarily or involuntarily, you must pay back the balance in 60 days or it is considered an early withdrawl. At that point you must pay a penalty (10%) and taxes on the amount you borrowed and had not yet paid back.

I would highly recommend finding another avenue other than borrowing against your 401(k). 

jcath

I did not take a loan from my 401K, I took a withdrawal and I did not incur a penalty for withdrawing. It's certainly a personal decision whether or not to use your retirement. For me - it made sense and it made IVF possible.  But I do think there is alot of misinformation about penalities and fees that simply do not apply. You should contact your retirement plan who can tell you what your options are.

njohnson1972

sweetky_06:

But. . .when you leave the job associated with your 401(k) you took the loan out on, whether voluntarily or involuntarily, you must pay back the balance in 60 days or it is considered an early withdrawl. At that point you must pay a penalty (10%) and taxes on the amount you borrowed and had not yet paid back.

Not necessarily true.  It depends on the plan.  I took a loan a few years ago and left my employer.  My plan was at Fidelity and I was able to keep making monthly payments directly to Fidelity for the loan until it was paid off.

NYBrideInWI

Thanks for all the input ladies. There certainly is a lot to consider (both financially and emotionally). I think sometimes I see the (decent) balance in my 401K and wonder why am I saving all this money for retirement tomorrow, when I could be using that money to *try* to have a bigger family today.

I'd forgotten about the tax deduction - I looked into it a few years ago when DH had some high OOP expenses, but we didn't spend quite enough to qualify.