by 
The Curious Bag
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<h4 class="dechead">On One Hand: Yes, You Can Borrow from Your Retirement
Most IRAs or 401k plans will allow you to make withdrawals to avoid a foreclosure or any other hardship. Moreover, you can take out a loan from your 401k plan. These loans are easy to get because you are borrowing from yourself. You will generally be restricted to borrowing only half of your balance or $50,000, whichever is less.
On the Other: Borrowing From Retirement Can Lead to Penalties
When you withdraw funds from your retirement account, you will have to pay a 10 percent withdrawal penalty if you are younger than 59 ½. In addition, if you take out a 401k loan and do not pay back the loan by the deadline, which is usually five years, it will be treated as a withdrawal, according to TheMoneyAlert.com.
Bottom Line
If you are trying to avoid a foreclosure, try other means first such as forbearance, where your mortgage payments are put on hold, or a loan modification. By borrowing from your retirement, you are not only depleting your nest egg, but also your employer will stop matching your contributions while you have an outstanding loan.
Source:
ThePhantomWriters.com: Using a 401K Loan to Stop Foreclosure
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